Gold falls more than 1% as platinum plunges

London: Gold fell more than 1 per cent in Europe on Monday as the dollar changed course to rise against the euro and oil prices eased, analysts said.

Platinum slipped nearly four per cent to a one-month low below $1,950 an ounce, silver fell more than 3 per cent while palladium declined over 4 per cent to a three-week low.

Analysts said gold was likely to trade in a range ahead of a US Federal Reserve meeting next week, but expectations of further interest rate cuts in the US were likely to support the market over the medium to long-term. Spot gold fell as low as $961.80 an ounce and was $963.20/$964.10 at 1319 GMT against $972.60/$973.40 late in New York on Friday.


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"I wouldn't be surprised if prices didn't do a lot ahead of next week's Fed meeting and, the closer we get, the less likely that people are to take big positions," said Michael Widmer, metals analyst at Lehman Brothers.

People were cautious as the Fed meeting will give a lot of information on issues such as the interest rate outlook and the health of the economy, Widmer said.

Gold hit an historic high of $991.90 an ounce on March 6 before funds cashed in. The metal had gained nearly 20 per cent in 2008, on the top of a 32 per cent rise last year.

Momentum indicators

"The metal's failure to break higher on Friday suggests the market may, just for the short-term, be in need of a phase of consolidation before challenging $1,000," said James Moore, precious metals analyst at TheBullionDesk.com.

"Momentum indicators have turned negative over the past two trading days and a break below $968.50 would suggest a test back to $952 initially, although further liquidation could pressure gold back to $936/$924," he said in a market note.

Platinum suffered heavily and fell below $1,950 an ounce on news that mines in South Africa, the world's top platinum producer, would get 95 per cent electricity supply against 90 per cent. The metal has fallen 15 per cent in less than a week after hitting a record high of $2,290 on March 4.

Platinum fell to $1,945/$1,955 an ounce after rising 3 per cent to $2,085, against $2,020/$2,030 in New York.

Robin Bhar, metals strategist at UBS Investment Bank said platinum was under pressure from a combination of fundamental concerns - the news that the South African mines would get more power and de-leveraging as investors trimmed positions.