Gold down, silver hits four-year low on strong dollar, equities

By Frank Tang and Clara Denina

NEW YORK/LONDON (Reuters) - Gold fell on Friday to its lowest price since January, and silver slumped to a four-year low as the dollar soared to its highest against the euro in four years on bets that U.S. interest rates will rise sooner than expected.

The dollar rose against a basket of currencies, on track for its 10th straight week of gains. [FRX/]

The S&P 500 equities index rose to an intraday record high, as Alibaba Group Holding Ltd's shares surged in their first day of trading in what looks likely to be the largest IPO in history. [.N]

"It's the same story since last week. Gold is under pressure with the dollar at an extremely lofty level, U.S. equities at all-time high, and expectations that U.S. interest rates will rise eventually," said David Meger, director of metals trading at brokerage Vision Financial.

Spot gold was down 0.5 percent at $1,218.46 an ounce by 11:52 a.m. EDT (1552 GMT). The session low of $1,214.29 was the lowest since Jan. 2.

For the week, gold was on track for a near 1 percent drop.

U.S. COMEX gold futures for December delivery slid $7.80 to $1,219.10.

Economic optimism has sapped gold's safe-haven appeal. U.S. economic activity rose less than expected in August, but was still consistent with a moderate expansion, The Conference Board said on Friday.

Among other precious metals, silver was down 2.5 percent to $18.01 an ounce. It touched $17.81, its lowest since August 2010.

Technical selling after silver broke below the $18 level accelerated the metal's drop, traders said.

Platinum dropped 0.7 percent to $1,333.75 an ounce and palladium fell 2.1 percent to $810 an ounce.

(Additional reporting by A. Ananthalakshmi in Singapore; Editing by Mark Potter, Clara Ferreira Marques and David Gregorio)