Gold Drops Over Dollar Inching Up

Gold fell as the dollar climbed for the third straight day, reducing the appeal of the precious metal as a hedge against inflation.

The U.S. Dollar Index, a weighted measure against the euro, yen and four other major currencies, gained as much as 0.3 percent. Yesterday, the U.S. currency rallied after Federal Reserve Chairman Ben S.

Bernanke signaled he was done cutting U.S. borrowing costs for now. That sent gold down 1.3 percent.

Gold futures for August delivery fell $1.70, or 0.2 percent, to $883.80 an ounce on the Comex division of the New York Mercantile Exchange. Earlier, the most-active contract dropped as much as 0.7 percent and gained as much as 0.5 percent. The price has climbed 5.5 percent this year.

Traders will monitor currency and energy markets for signals on inflation, Ruggiero said.

Crude oil fell as much as 2 percent today, weighing on gold, Ruggiero said. Gold may touch $876 an ounce in the next few days as inflation concerns ease, he said.

The soaring cost of raw materials has contributed to accelerating U.S. inflation, Bernanke said yesterday in a speech. Oil prices have jumped 86 percent in the past 12 months.