Gold drops with silver as dollar strengthens before US data

LONDON: Gold today declined as a stronger dollar curbed demand for an alternative investment and amid speculation the US economy is strengthening. Silver dropped.

Gold fell by one per cent to $1,380.60 an ounce and silver slid 1.6 per cent to $ 22.30 an ounce.

The dollar gained 0.4 per cent against six major currencies before US data today that economists say will show consumer confidence improved and home prices gained.

Central banks including Russia and Kazakhstan added gold to reserves in April, International Monetary Fund data showed. Bullion holdings in exchange-traded products are set for a fifth monthly drop.

Gold has slumped 18 per cent this year, while the dollar rallied 5.2 per cent against a six-currency basket on speculation the Federal Reserve may scale back quantitative-easing measures that helped bullion cap a 12-year bull run in 2012.

Raising interest rates or curbing bond buying too soon would endanger the recovery, Fed Chairman Ben S Bernanke said. He also said the pace of bond purchases could be reduced in the next few meetings if the jobless rate keeps dropping.