* Gold falls 5 pct, silver nearly 10 pct, platinum 6 pct
* Dollar hits new 2-year high vs the euro
* Oil below $64 a barrel to new 16-month low
(Updates throughout, adds comment)
By Jan Harvey
LONDON, Oct 24 (Reuters) - Gold pared losses on Friday after
sliding 5 percent in early trade, as the dollar retreated from
highs against the euro and investors took advantage of lower
prices to buy into the metal.
Spot gold <XAU=> fell to $684.90 an ounce, a new 13-month
low, before recovering to trade at $702.00/704.00 at 1335 GMT.
It was quoted at $720.00 in New York late on Thursday.
U.S. gold futures for December delivery <GCZ8> were down 0.8
percent or $5.70 at $709.00 on the COMEX division of the New
York Stock Exchange, having earlier touched a low of $681.
However, with oil sliding more than $4 a barrel and the
dollar close to the two-year high it hit earlier versus the
euro, analysts were unconvinced the bounce would be sustained.
"I don't think this is the end of the sell-off," Alan
Plaugmann, head of futures and options at Saxo Bank, said. "The
dollar strength is definitely one of the things that people will
be looking out for."
"In view of the way the equity markets are reacting...
people are now moving out of what are perceived as risky assets,
and that also means out of precious metals," he said, adding
that investors were primarily seeking security in cash.
European stocks dived 8 percent as investors worried about
the prospect of recession and company earnings deteriorated.
U.S. stocks slipped dramatically at the open.
Precious metals fell sharply earlier in the session, with
the fall in gold mirrored by a 10 percent slide in silver prices
and a 6 percent dip in platinum.
The dollar hit a new two-year high against the euro on
Friday as falling share prices in Asia and Europe prompted
investors to seek safety in the U.S. currency. []
A stronger dollar typically pressures gold, which is often
bought as an alternative investment to the currency. Gold prices
managed to move higher as the dollar later pared gains.
Oil, the other main external driver of gold, was also
negative for the metal. Crude fell below $64 a barrel on Friday
to new 16-month lows on the gloomy demand outlook and despite an
OPEC agreement to cut output. []
UNDER PRESSURE
OPEC said at its emergency production meeting on Friday it
would cut crude output by 1.5 million barrels per day from
September production levels, effective from Nov 1. []
The group had been expected to cut output by up to 2 million
barrels per day to safeguard prices after recent falls.
"Crude oil has been heading lower again since the start of
trading in Asia on fears that the cut might not be sufficient to
compensate (for) the shortfall of demand due to a global
recession," Dresdner Bank said in a research note.
"Gold is likely to remain under pressure."
Gold was also suffering from liquidation by speculative
investors and weak demand for jewellery, Wolfgang
Wrzesniok-Rossbach, head of sales at precious metals group
Heraeus, said.
"There are a lot of reports that because of the depreciation
of the rupee, there is almost complete breakdown in Indian
demand," he said.
Among other precious metals, silver tracked gold's recovery
after tumbling 10 percent to a session low of $8.74, its weakest
level since January 2006. It was later trading at $8.83/8.93
against $9.66.
Platinum meanwhile slumped to a near five-year low of $752
an ounce, as the firmer dollar added to existing pressure on the
metal from a fall in demand linked to expectations for slowing
economic growth.
Platinum <XPT=> was quoted at $759/779, down from $802.50,
while palladium <XPD=> was at $163.50/173.50, against $165.50.
(Reporting by Jan Harvey; editing by Sue Thomas)
