Gold, Silver May Decline as Dollar Strengthens Against Euro

Aug. 13 (Bloomberg) -- Gold and silver, little changed in New York, may fall as a gain in the value of the dollar reduces the appeal of the precious metals as an alternative investments.
Gold generally moves in the opposite direction of the U.S. dollar. Before today, gold had gained 6.8 percent this year while the euro had climbed 3.8 percent against the dollar.
``Dollar strength is a limiting factor for gold now,'' said Frank Lesh, a trader at FuturePath Trading LLC in Chicago.
Gold futures for December delivery fell $1.20 to $680.40 an ounce at 12:12 p.m. on the Comex division of the New York Mercantile Exchange.
Silver futures for September delivery fell 3 cents to $12.84 an ounce. Before today, the metal had fallen 0.5 percent this year.
The euro traded as low as $1.3606 after the European Central Bank lent emergency funds to banks for a third day to ease concern over a credit crunch, and stocks rallied worldwide. The euro reached a record $1.3852 on July 24.
The ECB, the U.S. Federal Reserve and other central banks injected $154 billion into money markets on Aug. 9 and $135.7 billion on Aug. 10 amid fears that U.S. subprime mortgage losses will curtail lending.
Gold may gain should investors lose confidence in the dollar and other currencies, analysts said.
``During periods where investors question credit quality, gold's monetary characteristics become more appreciated,'' said Gregory Orrell, who manages $120 million, including mining stocks, at Orrell Capital Management Inc. in Livermore, California.