LONDON, July 26: Gold limped to its lowest level in three months on Friday, spurned by nervous investors and beaten back by a stronger dollar.

Stock markets slumped to five-year lows in both the United States and Europe, sparking a small stampede into gold by some of the remaining bulls.

But upbeat US consumer sentiment data for July helped equities to stage a comeback, and gave the dollar another leg up against the euro, which snatched the rug from under gold’s feet.

In London, the spot price hit a low of $302.20 an ounce in the afternoon, its worst level since late April. “The funds are pulling out cash from everywhere,” one London trader said.

“Money is leaving the market. The market is not playing with normal things, like gold rising against the dollar weakening and equity doubts. These links have broken,” he said.

Analysts said the dollar’s rise against other major currencies such as the euro and yen had contributed to gold’s fall, partly because it makes gold more expensive for non-US buyers.

“The stronger dollar has given (gold’s fall) the lead but fundamentally, it was a lack of follow-through buying that prompted the bears to take the initiative,” said Ross Norman, analyst at TheBullionDesk.com.

Some analysts said gold has relinquished some of its appeal as a safe bet for investors seeking asset diversification in times of poor equity market performance.

“Following the recent slump in prices (in parallel) with a slump in the stock market, gold has lost some of its ‘safe haven’ status. Now it is behaving more like a base metal and is moving according to medium term economic prospects rather than reacting to short term fears,” said Lawrence Eagles of GNI research in a metals report.—Reuters