TOKYO, Oct 22: Gold fell about 1 per cent on Wednesday, extending the previous day’s 3 per cent decline as firmness in the dollar overshadowed the precious metal’s appeal as an alternative investment.

The euro fell to a two-year low against the dollar on Wednesday as investors bet that interest rates outside the United States will be cut sharply to try to bolster global growth.

Fears of a global recession also caused a slump in oil prices and stoked doubts over demand for gold and other precious metals.

Gold has been as vulnerable as oil and industrial metals, which reflect market views on the global economy, Yuki Sonoda, adviser at Daiichi Commodities Co in Tokyo.

Gold is no longer special, and now moves in line with the ups and downs of copper, lead and the stock markets, he said.

Spot gold stood at $762.60 an ounce as of 0513 GMT, down 1 per cent from New York’s notional close of $770.10. The current level is down 17 per cent from a peak of $931 hit earlier this month.

Underlining the tone, bullion holdings in the world’s largest gold-backed exchange-traded fund, the SPDR Gold Trust, fell to 755.64 tons, according to fund data as of Oct. 21, down from a record of 770.64 tons on Oct. 13.

Uncertainty in global financial markets despite coordinated interest rate cuts by central banks worldwide to address a credit crunch had spurred demand for bullion as a safe-haven asset.

On Wednesday, the euro fell below $1.2900 , down 1.4 per cent on the day. The COMEX gold futures contract for December delivery traded at $765.5 per ounce, down 0.3 per cent from the New York close and adding to a fall of 2.8 per cent on Tuesday.

The benchmark August contract for gold on the Tokyo Commodity Exchange fell 100 yen to 2,437 yen per gram.

Platinum traded at $890 an ounce, up from the notional close in New York of $885.50 and recovering from an almost four-year low near $830 per ounce marked last week. But it stayed pressured due to concerns about a slump in demand from the automobile sector.

North American Palladium said on Tuesday it was temporarily closing its Lac des Iles mine due to falling metals prices. Palladium , the other metal used in catalytic converters, was almost flat at $179 an ounce. Silver fell to $10.0 an ounce, down from New York’s notional close of $10.07.—Reuters