March 31 (Bloomberg) -- Gold rose in New York, capping a second straight quarterly gain, as a weaker dollar boosted the metal’s appeal as an alternative asset. Silver fell.

The U.S. Dollar Index, a six-currency gauge, fell as much as 0.9 percent, halting a three-session rally. Gold and the dollar are inversely correlated. Investment in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, has jumped 45 percent this year, according to data on its Web site.

“For investors who are concerned about the long-term prospects of the U.S. dollar, gold may be attractive,” John Reade, a UBS AG metals strategist, said today in a report. “In an environment where the reserve currency of the world could become shunned, gold could do extraordinarily well.”

Gold futures for June delivery rose $7.30, or 0.8 percent, to $925 an ounce on the New York Mercantile Exchange’s Comex division. The most-active contract is up 4.6 percent this quarter, the second straight gain and the biggest in a year.

Silver futures for May delivery fell 4.8 cents, or 0.4 percent, to $12.985 an ounce in New York. The price has jumped 15 percent this year, which is also the biggest quarterly gain since March 2008.

Gold and the dollar usually move in the opposite direction. Gold has posted gains every year since 2001, and the dollar index has only risen in three of those years.

Devalued Currencies

Investors may also purchase gold as central bank policies to ease borrowing costs devalue currencies, analysts said. Gold priced in euros and pounds reached records in February. Gold futures rose to an all-time high of $1,033.90 on March 17, 2008, in New York and touched $1,007.70, this year’s high, on Feb. 20.

Still, a global slowdown may limit gold’s gains, analysts said. Imports of the metal by India, the world’s biggest buyer, have been near “zero” for a second straight month, as a weak currency and record prices deterred jewelry buyers, the Bombay Bullion Association Ltd., a group of 230 traders, said today.

“Similar situations have been the subject of reports from Pakistan, Dubai, and pretty much the whole part of the world that we normally look to for underlying core gold demand,” said Jon Nadler, an analyst at Kitco Inc. in Montreal.

Gold fell 1.9 percent in March and silver sank 1 percent. It was the first monthly decline for both since October.

To contact the reporter on this story: Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net.

Last Updated: March 31, 2009 14:29 EDT