Singapore - Gold gained more than 1% on Friday after falling to its weakest since October 2007, but investors refrained from taking large positions, with their confidence already shaken by turmoil in financial markets.
Platinum jumped more than 4% on bargain hunting but poor car sales weighed on sentiment. Reports that US investment bank Lehman Brothers was in talks about a possible sale may also encourage investors to ditch commodities, including precious metals.
Gold rose to $750.90/751.70 an ounce from $739.60/741.20 an ounce late in New York on bargain hunting and steadier oil. It struck an 11-month low of $736.00 on Thursday after the dollar hit another 1-year high against the euro.
"News on Lehman seems pretty substantial at the moment and the markets are reacting rather edgy. But I think the real driver now is the dollar. It seems very strong," said Adriah Koh, an analyst at Phillip Futures in Singapore.
"From a technical perspective, the movement below the $750 regions is quite important and I am still a bit negative on it," said Koh, adding that gold was still under pressure from recent strength in the dollar.
Gold has lost as much as 28% in value since its March record high of $1 030.80, when worries about rising inflation and a struggling US dollar ignited buying from investors.
Lehman shock
Lehman Brothers was forced into talks about a possible sale after its shares plunged more than 40% on Thursday, raising questions about its survival.
Oil rebounded to above $101 a barrel on Friday, keeping a watchful eye on the path of Hurricane Ike that could disrupt refineries and production in the United States for weeks. The euro dropped 0.2% to $1.3984.
Spot platinum hit an intraday high of $1 175 an ounce, up from $1 126.50/1,146.50 late in New York on bargain hunting, but there were no signs of demand from jewellers,
automakers or investors.
"Problems with Lehman Brothers gave the market a big shock. Many investors have lost interest to buy platinum. They are rushing to sell," said Yukuji Sonoda, precious metals analyst at Daiichi Commodities in Tokyo.
Jewellery makers in China and Japan were selling back their stocks because of poor demand, while automakers sheered away from large positions because of the volatile platinum market, he said.
Platinum fell to $1 126 an ounce on Thursday, its weakest
since January 2007, due to worries about falling demand for
autocatalysts.
Platinum, mainly used in autocatalysts, has been hit by heavy selling due to a slowing US economy and poor car sales in the United States, Japan and China. It struck a record high of $2 290 an ounce in March.
"We cannot really see the market starting on a recovery based on today's buying. It still looks like platinum could decline some more. And we are still trading within the ranges of the previous day," said Koh of Phillip Futures.
"On the downside, I think $1 100 will be a nearby support
and I will place yesterday's high at $1 185 as a resistance
point for platinum to perhaps move higher if these regions are
breached."
Platinum last hit around $1 100 in January 2007.
- Reuters