Gold rose for the first time in four days in London as the dollar weakened against the euro, increasing the appeal of the metal as an alternative investment. Silver gained and platinum declined.

Gold has had a correlation of 0.67 to the euro-dollar exchange rate this year, up from 0.58 last year, Bloomberg data show. A figure of 1 would mean the two move in lockstep. The euro climbed for the first time in three days after the German economy grew at the fastest pace in 12 years.

Gold is tracking the gain in the euro “on the back of the German GDP numbers,” Mario Innecco, a futures broker at MF Global Ltd. in London, said today by telephone.

Gold for immediate delivery rose $1.82, or 0.2 percent, to $865.82 an ounce as of 12:36 p.m. in London. Prices have dropped 2.2 percent this week, compared with an advance of less than 0.1 percent in the UBS Bloomberg CMCI Index of 26 raw materials.

Futures for June delivery fell 50 cents to $866 on the Comex division of the New York Mercantile Exchange.

Gold “is likely to come under further pressure from speculators in the short-term following the increase in risk appetite and the view that inflation, for now, remains contained,” James Moore, an analyst at TheBullionDesk.com, said in a report.

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Feb. 27 (Bloomberg) — Gold rose to records in London and New York and silver gained to a 27-year high as the dollar’s all- time low spurred demand for precious metals as a hedge against inflation. Palladium rose to the highest since 2001.

Gold is up 15 percent this year as a U.S. housing slump and turmoil in credit markets led the Federal Reserve to lower interest rates when commodities were rising to records. The dollar declined on speculation Fed Chairman Ben S. Bernanke will signal more rate cuts in testimony to Congress today.

“With a weaker dollar, imports become more expensive and that can import inflation into a country,” said Ben Davies, chief executive officer of Hinde Capital Ltd. in London who helps manage the Hinde Gold Fund. “The Fed wants to inflate their way out of the problems of a huge deficit and a banking system that’s at the point of imploding.”

Gold for immediate delivery climbed $10.30, or 1.1 percent, to $958.45 an ounce as of 11:24 a.m. in London after earlier rising to a record $964.99. Read Full Story

Feb. 22 (Bloomberg) — Gold, little changed in London, headed for its biggest weekly advance in 19 months as lower U.S. interest rates may revive investor demand for the metal as an alternative to the dollar. Platinum dropped from a record.

The dollar traded near a three-week low against the euro on speculation U.S. economic growth will slow, forcing the Federal Reserve to lower interest rates. Gold has climbed 45 percent since the Fed in August announced a policy shift to contain the subprime mortgage collapse.

“It’s been six months this week since the Fed started cutting interest rates and gold has gone nuts,” said Adrian Ash, head of research of London-based BullionVault, a gold dealer that holds about six tons of gold for customers in vaults in London, Zurich and New York. “The more the Fed promises cheaper money, the more people will choose an alternative to the dollar.”

Gold for immediate delivery rose 9 cents, or less than 0.1 percent, to $946.19 an ounce as of 10:54 a.m. in London. Prices this week are up 4.8 percent, the biggest weekly advance since July 14, 2006. Read Full Story