Gold dips nearly 13-month low as oil prices plunged

Gold plunged 2 more percent on Friday, as it moves towards a 13-month low struck on the previous day, and as early buying decreased, equities plummeted and oil slipped lower despite expectations of an output cut by OPEC.

This month, the gold has dropped to more than 16 percent and it is heading for its biggest monthly decline since 1983 and its fourth-biggest drop in three decades. Plunging equities market made investors sell gold to cover losses.

Gold was trading at $707.10 an ounce, down $15.40, with a rising dollar against the euro adding to the selling pressure. It hit an intraday low of $704.35, not far a 13-month low of $697.45 hit on Thursday.

Everything is falling

 "Oil is falling; the stock markets in Asia are falling. Everything is falling. I don't know when this will end," said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong.
 
But weaker prices also attracted buying from jewellers, which could help gold stay above the key support of$700. "Of course, there's physical buying. There's not enough gold in Hong Kong," said Leung.
 
Gold has fallen as much as 32 percent since having a lifetime high of $1,030.80 in March, when investors invested on gold due to record high oil, 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 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.
 
Kwan pegged resistance at $735 and support at $685 -- levels seen in September 2007.Oil shed early gains on Friday and fell nearly $1 to below
$67 a barrel, near the previous day's 16-month low, as investors shrugged off a likely production cut by oil producer cartel OPEC to focus on signs of a prolonged global recession.