Dec. 9 (Bloomberg) -- Gold futures rose as much as 0.9 percent, paring their biggest drop in seven months, as the dollar weakened from yesterday's intraday high against the euro, boosting the appeal of gold as an alternative to U.S. stocks and bonds.

The precious metal plunged 3.3 percent yesterday as some large speculators sold the metal after the dollar rose the most in a month against the yen and rallied versus the euro. The dollar traded at $1.3343 against the euro at 9:29 a.m. in Sydney, compared with yesterday's intraday high of $1.319.

``Gold's trading back higher with the dollar's change -- there's no question the U.S. dollar is driving prices,'' said Simon Roberts, a commodity strategist at National Australia Bank Ltd. in Melbourne. ``The size of yesterday's drop was due to speculative selling.''

Gold for February delivery rose as much as $3.80 to $442.50 an ounce in after-hours trading on the Comex division of the New York Mercantile Exchange at 9:36 a.m. in Sydney.

Yesterday, gold futures slumped $15 to $438.70, the biggest percentage drop for a most-active contract since April 28.

The U.S. dollar climbed to 104.07 yen at 4:15 p.m. in New York yesterday from 102.97 late on Dec. 7.

Gold prices have risen 10.1 percent in the past three months as the dollar fell 9.5 percent against the euro.

Gold for immediate delivery rose $3, or 0.7 percent, to $440.45 an ounce at 8:50 a.m. Sydney time, compared with $437.45 at 1.30 p.m. yesterday in New York.

To contact the reporter on this story: Matt Chambers in Melbourne at mchambers1@bloomberg.net

Last Updated: December 8, 2004 17:55 EST