Gold slipped on Friday and was on course for its biggest monthly decline since 1983, as oil fell on recession fears, the dollar firmed and stocks reversed gains, forcing investors to cash in to stem losses
Gold slipped on Friday and was on course for its biggest monthly decline since 1983, as oil fell on recession fears, the dollar firmed and stocks reversed gains, forcing investors to cash in to stem losses.
U.S. gross domestic product shrank at an annual rate of 0.3 percent for the third quarter, the sharpest fall in the world's largest economy in seven years, spurring a broad commodities sell-off on concerns over weakening fundamentals. The U.S. dollar's rebound also weighed.
Platinum fell more than 5 percent as slowing economies around the globe and the widespread credit crisis caused the largest auto industry companies to slash full-year profit targets, warn of job losses and push for speedy government handouts.
Gold was at $731.75 an ounce, down $3.75 from New York's notional close on Thursday, when it rose for a fourth straight day to its strongest in a week at $776.30 an ounce.
"There's no fund buying in gold and platinum. Gold is very bearish and going below $700 may be possible. Oil prices are also down," said Yukuji Sonoda, precious metals analyst at Daiichi Commodities in Tokyo.
Oil slipped for a second day on Friday and is set for its biggest ever monthly loss as U.S. weak economic data rekindled demand worries, which in theory reduces gold's appeal as a hedge against inflation.
"Investors are reluctant to buy too much, in case anything happens. We've seen a little bit of physical selling around $770," said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong, referring to this week's high.
Premiums for gold bars eased to $1.70 an ounce to the spot London prices from $3 last week after holders cashed in on this week's rally.
Gold has lost as much as 21 percent of its value this month alone, and is down 12 percent this year.
It hit a 13-month low of $680.80 last week after investors sold bullion to pay for margin calls. A recovery in stock markets and firmer oil spurred a rebound in gold this week but technical selling emerged after it failed to sustain Thursday's high.
"Only if $775 is breached, then gold would be able to head towards the next resistance at $806," said analyst Pradeep Unni at Richcomm Global Services.
"Gains could be quick once $775 is scythed convincingly."
Gold, which has benefited from safe-haven buying, fears of rising energy costs and uncertainties in the dollar's outlook, was well below a recod high of $1,030.80 struck in March.
The Nikkei average fell 5 percent after the Bank of Japan cut interest rates for the first time in seven years. The euro dipped to $1.2830 making dollar-priced gold more expensive for holders of other currencies.
Platinum was trading at $772.50 ounce, down $44.50 from New York's notional close. It has lost more than 60 percent of its value since hitting a lifetime high of $2,290 in March, mainly due to worries about falling demand for autocatalysts.
As the strong yen forced Japanese carmakers Mazda and Mitsubishi to slash full-year targets, struggling U.S. automakers were looking to obtain billions from the U.S. government to help them survive.
More than 60 percent of global platinum use goes to autocatalysts to clean exhaust fumes.
New York gold futures fell $5.3 an ounce to $733.2.