Gold slides on dollar's rise ahead of US data

The yellow metal fell for the third straight session as the advance in US dollar eroded demand on the metal as alternative investment.

Spot gold is trading at $1220.41 an ounce after recording a high of $1225.80 and a low of $1219.37.

Gold firmed over the past three weeks on worries global economic recovery is slowing down but may witness the first drop in three weeks this week as the strong dollar negatively affected dollar-denominated commodities.

S&P GSCI commodity indicator fell 5.03 to 497.32, while Rj/CRB commodity dropped 0.98 to 266.03.

Oil also slipped for the fifth day to $72.20 a barrel from yesterday's closing at $72.90 affected by the dollar's surge and drop in Asian shares.

Yet, gold may found support from expected physical demand from India, the world's largest gold buyer, where festival season starts next week and ends in November.

Today, the dollar strengthened against a basket of major currencies as depicted by the dollar index which rose to 83.44 compared with yesterday's closing at 83.22 before the release of US home data.

Last week, US initial jobless claims increased to 500 thousands from 488 thousands, the highest level since November, whereas expectations refer that US home sales will decline 13% in July to reflect the weakness in the housing sector.

Yesterday, gold shed $2.10 or 0.17% to close at $1225.70 an ounce. Gold Price was setin London on Monday at $12260 per ounce during the PM fixing declining from $1227.00 during the AM fixing. SPDR gold trust, the world's largest exchange-traded fund backed by bullion, lingered at 1,299.47 on August 23.

Among other precious metals, platinum slipped to $1496.50 from $1503.20 on Monday; palladium plummeted to $475.10 from $477.70; and silver plunged to $17.85 from $17.91, as of 08:00 GMT.