Gold drifted lower on Monday, reversing an earlier one per cent rally after oil markets trimmed gains and the dollar gained strength.
The picture for other precious metals was mixed, with platinum following gold lower as last week's selling, which dragged bullion down eight per cent, resumed after a short break.
Gold fell $1.85, or 0.2 percent, to $793.15 an ounce at 0610 GMT from New York's notional close on Monday.
“The bias is towards the downside not withstanding the rally in the past couple of days — bargain hunting has kept the market up, but the downside is not over yet,” said Adrian Koh, analyst at Phillip Futures.
“We are looking at $770 to $780 to provide support. If we move below that we could see $730.”
Gold dipped to just above $780 an ounce last week before bouncing.
Oil pared earlier gains to trade 0.4 per cent up to $74.51 a barrel yesterday — more than $1 off early peaks. Oil has tumbled more than 50 per cent from its peakabove $147 a barrel.
The euro fell to $1.3319, having risen to $1.3530 on Monday.
The dollar gained ground overnight on comments by Fed chief Ben Bernanke urging Congress to throw more money at the financial crisis.
Mark Pervan, senior commodities analyst at ANZ said: “The dollar held back some of the gains in gold. Longer term, we are pretty comfortable with our call for gold at $800 at the end of the year.”
“Going forward, we will see more volatility and I think prices will trend lower. What will weigh on gold un the future is equities. People will be selling gold to pick up what they see as cheap positions.”
The world's largest gold-backed exchange-traded fund, the SPDR Gold Trust GLD, said its bullion holdings slipped on Oct. 20 by 0.61 tonnes to 756.25 tonnes.
Holdings in the trust, which issues securities backed by physical stocks of gold, touched a record of 770.64 tonnes on October 13.
Silver rose by 0.9 per cent to $9.84 an ounce. Pervan noted that speculative length in silver had fallen by 55 percent in the past three months, versus a 40 per cent cut in net length in gold, according to most recent CFTC data.
“Silver has strong potential for long re-positioning. The longs are well down and we could be seeing a little rebuilding.”
Platinum reversed early gains, dipping 2.4 per cent to $871.00 ounce, down $22 from New York's notional close, when prices gained 3.6 per cent.
Palladium rose 50 cents to $179.00.
Benchmark gold futures on the Tokyo Commodity Exchange fell 37 yen or 1.4 percent to 2,591 yen per gram as of 0638 GMT. Key platinum futures were down 88 yen or 3 percent at 2,898 yen per gram.
New York gold futures GCZ8 rose 0.9 percent to $796.7.