SINGAPORE (Bloomberg) -- Gold rose in Asia on speculation the dollar may extend declines after the Federal Reserve's quarter-point interest-rate cut, boosting bullion's appeal as an alternative asset. Silver also gained.

The Fed reduced its benchmark interest rate by a quarter-point to 4.25 percent, the third cut since mid September, to prevent a housing slump and credit squeeze from undoing a six-year expansion. The U.S. dollar has fallen 11 percent this year against the euro while gold has gained 27 percent.
“Gold's trend remains positive and there are investors buying on the dips today (Wednesday)” on expectation the dollar may remain weak and demand may rise in early 2008, Dick Poon, manager of the precious metals trading desk at Heraeus Ltd., said by phone from Hong Kong Wednesday.
Bullion gained $8.42, or 1.1 percent, to $805.40 an ounce at 3:09 p.m. Singapore time. The precious metal traded as low as $796.35 in New York Tuesday. Silver gained 0.7 percent to $14.55 an ounce.
Gold is “in a contracting range between $779 and $829 as the market acclimatizes to higher levels,” technical analysts at UBS AG said in a report Tuesday. “The risk is for a run to $850 and higher in the first quarter next year.”
February-delivery gold on the Comex division of the New York Mercantile Exchange fell $5.90, or 0.7 percent, to $811.20 an ounce at 3:11 p.m. Singapore time.
In Japan, the most active gold futures contract fell 25 yen, or 0.9 percent, to close at 2,901 yen a gram ($812 an ounce) on the Tokyo Commodity Exchange.