Sept. 25 (Bloomberg) -- Gold traded near the highest in nine sessions as the dollar declined, boosting the appeal of the precious metal as an alternative investment.

The dollar fell on speculation home-sales reports will add to evidence that the U.S. economy is slowing, prompting more investors to bet the Federal Reserve will cut interest rates. Higher rates boost the appeal of the dollar and curb the attractiveness of bullion, which bears little or no interest.

``Gold rebounded because of the weaker dollar and bargain- hunting,'' said Peter Fertig, an analyst at Dresdner Kleinwort in Frankfurt. ``The underlying tone has improved for gold.''

Gold for immediate delivery was little changed at $589.20 an ounce as of 9:09 a.m. in London. That's the highest since Sept 13. Bullion for December delivery fell 60 cents, or 0.1 percent, to $594.80 an ounce on the Comex division of the New York Mercantile Exchange.

Sales of previously owned homes in the U.S. probably fell in August to the lowest since early 2004, according to a Bloomberg News survey. Sales of new homes probably dropped, according to a separate survey. An industry report on existing-home sales is due today, and a government report on new-home sales will be released on Sept. 27.

The dollar fell against the euro, to $1.2793 from $1.2784 late Friday. It was also at 116.32 yen compared with 116.56 late Friday.

Earlier, gold fell in Asia as crude oil prices declined.

Spot gold has dropped about 20 percent from a 26-year high of $730.40 an ounce in mid-May. The metal dropped more than $50 in the first two weeks of September, partly as declining crude oil prices reduced the metal's appeal as a hedge against inflation.

European central-bank members, under the so-called Central Bank Gold Agreement, have a deadline of Sept. 26 to sell gold up to their annual limit of 500 tons. They have sold 380 tons of this year's allotment as of Sept. 19, according to the producer- funded World Gold Council in London. In the week ended Sept. 15, bank sales were the most since June, and gold prices fell the most in two months.

Palladium fell $3 to $316 an ounce. Platinum dropped $6 to $1,139.50 and silver fell 1 cent to $11.14.

To contact the reporter on this story: Julie Tay in London at jtay1@bloomberg.net.

Last Updated: September 25, 2006 04:40 EDT