March 23 (Bloomberg) -- Gold gained in Asia as a weaker dollar fueled demand for the precious metal as an alternative investment and store of value.

Gold has risen 3.2 percent in the past week as the dollar index, which tracks the greenback against six major trading partners, slumped 4.2 percent. The benchmark MSCI Asia Pacific Index added 3.2 percent ahead of a U.S. Treasury announcement today of plans to rid banks of toxic assets.

“What’s holding gold up is that risk aversion moving out of the dollar into gold,” Justin Smirk, senior economist at Westpac Banking Corp., said in a Bloomberg Television interview today. “Unless you believe the dollar’s going to weaken materially, gold’s about as good as it gets right now.”

Gold for immediate delivery was at $952.96 an ounce at 1:20 p.m. in Singapore, after rising as much as 0.7 percent earlier, extending last week’s 2.4 percent gain.

The dollar weakened against the euro before the Obama administration this week outlines regulatory changes aimed at avoiding a repeat of the crisis that’s crippled the U.S. banking system, hurting the appeal of the dollar as a refuge. The dollar last traded at $1.3664 per euro compared with $1.3582 on Friday.

“Gold will keep to its range trade as it gets pulled in opposite directions by the stock and currency markets,” Pan Jinghua, an analyst at Shanghai Jinpeng International Futures Co., said today.

Buy Gold

Twenty-one of 28 traders, investors and analysts surveyed from Tokyo to Chicago advised buying gold this week as the dollar tumbles. Five said to sell, and two were neutral.

Gold has “got the potential to test $980, $990 this week,” Peter McGuire, managing director at Commodity Warrants Australia Ltd., said in a Bloomberg Television interview today. “The major driver is where the U.S. dollar trades this week and we see further downside on that one.”

Assets in the SPDR Gold Trust, the biggest such fund backed by bullion, expanded to a record 1,114.6 metric tons for a third day March 20, according to figures on the company’s Web site.

Among other precious metals for immediate delivery, silver added 0.5 percent to $13.82 an ounce, platinum lost 1.1 percent to $1,102.50 an ounce, and palladium slid 0.4 percent to $206.25 an ounce as of 1:27 p.m. in Singapore.

To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net

Last Updated: March 23, 2009 01:38 EDT