Gold headed for the biggest decline in a week as a European Central Bank plan to expand the scope of its stimulus program helped boost the dollar and global equities, reducing demand for the metal as an alternative asset.

U.S. and European stock markets rallied and the euro fell to a two-week low after ECB President Mario Draghi signaled that policy makers are able to increase stimulus to counter the risk of slower growth. The Bloomberg Dollar Spot Index rose to the highest since Aug. 12.

Gold in August posted the first monthly increase since May as a retreat in equities and an unexpected devaluation in China’s yuan boosted the metal’s appeal as a haven. Bullion is giving back some of that gain as an improving U.S. economy boosts prospects for the Federal Reserve to tighten monetary policy, which curbs the appeal of gold because it doesn’t pay interest. Economists surveyed by Bloomberg expect a government report Friday to show the U.S. added more than 200,000 jobs for a fourth straight month in August.

Gold futures for December delivery declined 0.8 percent to $1,124.40 an ounce at 10:56 a.m. on the Comex in New York, heading for the biggest drop since Aug. 26. Prices slipped 0.5 percent yesterday.

Holdings in exchange-traded products backed by gold fell 0.9 metric ton to 1,520.5 tons as of Wednesday, according to data compiled by Bloomberg. Assets are near the lowest since 2009.

Silver futures for December delivery lost 0.1 percent to $14.655 an ounce on the Comex.

Source: Bloomberg