SINGAPORE (Commodity Online) : Gold prices declined in Asian trade Tuesday and is likely to fall further as the dollar gained for the third day against the euro.

Gold for immediate delivery was seen trading at $1,040.50 at 11.30 a.m in Singapore, after earlier touching $1,037.03, the lowest since Oct. 7.

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Gold, which typically moves inversely to the dollar, dropped 1.6 percent on Monday, the most since July 28.

The most active gold contract for December delivery dropped $13.60, or 1.3 percent, to finish at $1,042.80 an ounce. It tumbled to as low as $1,041.10 shortly before pit trading closed. That is also the weakest level since Oct. 7.

The U.S. currency extended gains against the euro on concern the government will phase out a tax credit for homebuyers and Bank of America Corp. will have to sell shares to pay back its government bailout.

Among other precious metals, silver increased 0.2 percent to $17.11 an ounce, platinum added 0.2 percent to $1,335.25 an ounce and palladium was down 0.1 percent to $331.75 an ounce.

Meanwhile, the world's largest gold-backed exchange-traded fund, SPDR Gold Trust said its holdings stood at 1,106.874 tones as of Oct. 26, down 1.22 tones from the previous business day.