Jan. 2 (Bloomberg) -- Gold rose in Asia after an eighth straight annual gain as demand increased for the metal as a hedge against inflation and an alternative asset.

Gold advanced 5.8 percent last year on demand for a store of value as a financial crisis pushed major economies into recession and drove equity markets lower.

“If one bought gold on January 1, 2008, instead of any other investment, they would still have everything they had come January 1, 2009,” Peter Grandich, managing member of Grandich Publications, said in a report. “How many people wish all they did was break even in 2008? Gold continues to offer not only that result, but gains of 20 percent or more in 2009.”

Bullion for immediate delivery gained $2.10 an ounce to $881.55 at 9 a.m. in Singapore, after earlier rising as much as 1 percent to $888.35. Gold for February delivery fell 0.2 percent to $882.40 in after-hours electronic trading on the Comex division of the New York Mercantile Exchange.

Expectations for a weaker dollar will be supportive for gold, according to Standard Chartered Plc. The currency was at $1.4010 euro from 1.3966 late in New York Dec. 31, and was at 90.77 yen from 90.86.

“Gold’s inverse relationship with the U.S. dollar has weakened over the last 12 months, but it remains significant,” the bank’s analysts Helen Henton and Dan Smith wrote in a report.

Standard Chartered forecast gold will average $985 an ounce in 2009, up from an earlier forecast of $875. Bullion is estimated to average $910 an ounce in the first quarter.

“The end of the deleveraging process and greater risk appetite are ambiguous for gold, but in the context of a weakening U.S. dollar, we believe fresh investment flows will outweigh withdrawal of previous safe haven flows,” Henton and Smith said..

Among other precious metals for immediate delivery, silver fell 0.4 percent at $11.345 an ounce, platinum was little changed at $935 an ounce, and palladium rose 1.1 percent to $189 an ounce as of 8:54 a.m. in Singapore.

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

Last Updated: January 1, 2009 20:32 EST