Oct. 27 (Bloomberg) -- Gold fell for a fourth straight session, the longest slide since August, amid concern that the dollar will extend a rally, curbing demand for the precious metal as an alternative asset.

The dollar rose against a basket of six major currencies, adding to three consecutive advances since Oct. 21, when it touched a 14-month low. Gold, which often moves inversely to the greenback, has dropped 2.7 percent in the past four sessions.

“Gold doesn’t have that much buying interest,” said Matt Zeman, a LaSalle Futures Group Inc. metals trader in Chicago. “The dollar could undergo a wicked short-covering rally, and the gold market needs to look out below.”

Gold futures for December delivery fell $7.40, or 0.7 percent, to $1,035.40 an ounce on the Comex division of the New York Mercantile Exchange. The slump was the longest since Aug. 10. The metal has climbed 17 percent this year, reaching a record $1,072 on Oct. 14.

A rise in bets on a drop in futures is a “signal that an increasing proportion of market players view the current gold price as unsustainable,” Eugen Weinberg, a Commerzbank AG analyst in Frankfurt, said yesterday in a report. “Should this sentiment spread further, gold could come under considerable pressure.”

Hedge funds and other large speculators trimmed their net- long position in gold futures by 2 percent as of Oct. 20, from a record in the previous week, and miners, producers and commercial users increased their net-short position, Commodity Futures Trading Commission data show. A net-long position benefits when prices rise, while net-shorts gain from a decline.

ETF Holdings Fall

Holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, fell 1.22 metric tons to 1,106.87 tons as of yesterday. The holding reached a record of 1,134 tons as of June 1.

“You’re getting a lot of anxiety on whether gold can sustain a rally above the $1,000 level,” Zeman said.

Silver futures for December delivery fell 55.5 cents, or 3.2 percent, to $16.54 an ounce in New York.

Platinum futures for January delivery dropped $26.80, or 2 percent, to $1,319 an ounce on the Nymex. Palladium December futures slipped $2.70, or 0.8 percent, to $330.55 an ounce.

To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net.

Last Updated: October 27, 2009 14:28 EDT