Gold sheds 4% as dollar rallies

London: Gold tumbled nearly four per cent on Tuesday as the dollar rallied to a one-and-a-half year high against the euro, denting the precious metal's appeal as an alternative investment.

Spot gold was quoted at $767.00/$769.00 an ounce at 1304 GMT, down from $795.00 an ounce late in New York on Monday. Earlier it touched a session low of $764.20.

After several weeks of buffeting by equity markets, which have dictated interest in gold as a haven from risk, the precious metal is now returning to its usual two external influences, the dollar and crude oil, say analysts.

"The market is more focused on euro/dollar again," said Commerz-bank senior trader Michael Kempinski. "The stock market has made back some of its losses so safe-haven buying is over for the time being."

The dollar rebounded to a one-and-a-half year high against the euro, as investors were cheered by Federal Reserve Chairman Ben Bern-anke's testimony to Congress on Monday, during which he endorsed more government spending to stimulate the US economy.