Oct. 27 (Bloomberg) -- Gold gained for the second day in Asia after its drop prompted purchases, and as equities pared losses on speculation the Federal Reserve will cut interest rates this week.

Bullion is down 15 percent this month as the dollar climbed to a two-year high against the euro and the Standard & Poor's 500 Index headed for its steepest monthly loss since 1938.

``We're seeing some consolidation in the market today as investors pause for breath following the roller-coaster we had last week,'' Zhu Lv, research manager at Shanghai Tonglian Futures Co., said from Shanghai today.

Gold for immediate delivery gained as much as 1.7 percent to $746.91 an ounce, and traded at $735.33 at 10:29 a.m. in Singapore. The metal fell below $700 on Oct. 24. Silver for immediate delivery was up 1 percent at $9.4575 an ounce.

``Gold still benefits from its safe haven properties, although these days, more and more are choosing to hold just cash instead, so it won't be surprising to see gold below $700 again,'' said Zhu.

The dollar advanced to $1.2565 versus the euro at 10:31 a.m. in Singapore from $1.2623 late Oct. 24. The dollar is reasserting its status as the world's reserve currency as investors, banks and even companies are scooping up dollars to repay loans denominated in the currency as the 14-month-long credit crisis intensifies.

Gold for December delivery rose 0.7 percent to $735.10 an ounce in after-hours electronic trading on the Comex division of the New York Mercantile Exchange.

Gold for August delivery in Tokyo added 5.6 percent to 2,228 yen a gram ($735 an ounce) at 8:59 a.m. Singapore.

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

Last Updated: October 26, 2008 22:37 EDT