March 23 (Bloomberg) -- Gold fell for a second straight session as equities rallied worldwide, eroding the appeal of the precious metal as an alternative asset. Silver gained.

The MSCI World Index of stocks rose for the ninth time in 10 sessions. The U.S. Treasury today said it would buy as much as $1 trillion of devalued real-estate assets in the latest move to revive the banking system. Gold still has gained 7.7 percent this year, while the MSCI index dropped 14 percent.

“The gold market is moving simply as a measure of fear,” said Leonard Kaplan, the president of Prospector Asset Management in Evanston, Illinois. “As the stock market moves higher, some of the fear factor comes out of gold.”

Gold futures for April delivery fell $3.70, or 0.4 percent, to $952.50 an ounce on the Comex division of the New York Mercantile Exchange. The price declined 0.3 percent on March 20.

The Treasury announcement provides details on an initial strategy laid out by Secretary Timothy Geithner last month. The Standard & Poor’s 500 Index jumped as much as 4.8 percent today.

U.S. equities also rose after the National Association of Realtors said U.S. sales of previously owned homes unexpectedly climbed in February as record foreclosures attracted bargain hunters.

Gold ETF

Investment in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, rose to a record 1,115 metric tons last week. The fund has grown 43 percent this year.

Gold will rise to $1,050 within one month and $1,100 in three months, UBS AG analyst John Reade said.

“Gold will probably continue to follow inflation expectations in the near term, although it remains vulnerable to improved risk-asset sentiment,” Reade said. “Other central banks may also announce credit easing, and this could help sentiment toward gold.”

Gold soared the most in six months on March 19 after the Federal Reserve announced plans to buy more than $1 trillion of Treasuries and mortgage debt to cut borrowing costs.

The Fed has already slashed its benchmark interest rate to zero to 0.25 percent.

Silver, which has wider industrial applications than gold, rose for a third straight session. The Reuters/Jefferies CRB Index of 19 raw materials gained as much as 1.3 percent, paced by advances in crude oil, as prospects for an economic recovery improved.

Silver futures for May delivery rose 3.5 cents, or 0.3 percent, to $13.875 an ounce. The price is up 23 percent this year after shedding 24 percent in 2008. Gold rose 5.5 percent last year.

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

Last Updated: March 23, 2009 14:28 EDT