Singapore - Gold slipped on Friday as early bargain hunting subsided but expectations of an output cut by Opec could help bullion defy a strengthening US dollar, which had sent the price to a 13-month low the previous day.
Gold has dropped more than 16% so far this month, heading for its biggest monthly percentage decline since 1983 and its fourth-biggest monthly drop in three decades. Tumbling equities markets drove investors to sell gold to cover losses.
Gold was trading at $718.00 an ounce, down $4.50 from New York's notional close on Thursday, when it fell as low as $697.45, its lowest level since September 2007. It hit an intraday high of $728.10 on Friday.
Gold metal has fallen as much as 32% since spiking to a lifetime high of $1 030.80 in March, when investors snapped up bullion on record high oil, fears of rising energy costs and uncertainties in the dollar's outlook.
"The way buying interest quickly emerged when gold broke $700 shows there's an appetite for gold at that level," said William Kwan, bullion director at Gold Capital Management in Singapore.
"However, the dollar presumably will still be heading up and and that might be bad for gold. I will not be surprised to see gold deflate further towards $640 before the market perceives it as a safe haven asset again at a bargain price," he said.
May come in $600 regions
Kwan pegged resistance at $735 and support at $685 - levels seen in September 2007.
Oil added $1.08 to $68.92 a barrel on Friday, having settled up $1.09, as dealers expected Opec to agree to cut output, with Iran suggesting a 2-million-barrel-per-day cut and Qatar at least a 1-million-bpd reduction.
In other markets, the dollar index, which measures the dollar's value against a basket of six currencies, was up 0.7% at 85.333, after rising to a two-year high of 86.120 on Thursday.
The Nikkei average fell 4.9% on Friday and hit its lowest point in more than five years. "I guess it's a bit of a technical rebound in gold after we traded below the $700 an ounce mark. I think trading is still very cautious at the moment and i remain generally neutral with a slight downward bias," said a dealer in Singapore.
"I think the $693 regions will come in as the next supports, then the next regions will be around $675-$680," he said.
Platinum was trading at $798.00 ounce, down $4.50 from New York's notional close. It fell to $770 on Thursday, its weakest since June 2004, on fears of falling demand from automakers as the world tilted into a recession.
General Motors and Chrysler took steps on Thursday to cut jobs andclose plants as automakers from Europe to Asia forecast a deeper global downturn in auto sales.
More than 60% of global platinum use goes to autocatalysts to clean exhaust fumes.
New York gold futures rose $$1.6 an ounce to $716.3.
- Reuters