Gold Rises for Third Session in New York on Bets Dollar to Drop

Dec. 28 (Bloomberg) -- Gold rose in New York for the third straight session on speculation that the dollar will extend a slump, boosting demand for the metal as an alternative asset.

The dollar pared gains of as much as 0.4 percent against the euro after declining 1.1 percent in the previous three sessions. Gold has climbed 25 percent in 2009, heading for the ninth straight annual gain, while the dollar slid 2.9 percent.

“Gold’s moves will all be dollar-based now,” said Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago. “Some pressure has come off the euro, and that’s allowed gold to come back.”

Gold futures for February delivery rose $3.10, or 0.3 percent, to $1,107.90 an ounce on the Comex division of the New York Mercantile Exchange. The price climbed 1.7 percent in the previous two sessions.

Gains were limited as some investors booked profits after the most-active contract rose to a record $1,227.50 on Dec. 3. Earlier, the price fell as much as 0.2 percent.

“Some of the larger buyers have bailed on gold and, until the big money comes back on the buy side, gold is going to struggle,” said Matt Zeman, a LaSalle Futures Group trader.

In London, gold for immediate delivery fell 65 cents to $1,104.80 an ounce at 7:24 p.m. local time.

Among other precious metals traded in New York, platinum jumped to a three-week high as rising auto sales helped boost demand for the metal used in pollution-control devices in cars. Toyota Motor Corp., Japan’s largest automaker, led the first gain in domestic production in 14 months by the nation’s 12 vehicle producers as government incentives spurred demand.

Platinum futures for April delivery climbed $15.70, or 1.1 percent, to $1,489.70 an ounce on the Nymex. Earlier, the most-active contract reached $1,498.80, the highest price since Dec. 3. March palladium, also used in car parts, fell 80 cents, or 0.2 percent, to $388.85 an ounce.

Silver futures for March delivery rose 12 cents, or 0.7 percent, to $17.56 an ounce. The metal is up 55 percent in 2009.