March 06, 2007	Tuesday	Safar 16, 1428

LONDON, March 5: Gold tumbled to its lowest in six weeks on Monday as the carnage on equity markets infected sentiment for the precious metal and investors sold to cover their losses, analysts said.

South Africa's Anglogold Ashanti lost 4.2 per cent andAustralia's Newcrest Mining was down 1.5 per cent.

Spot gold was down at $636.20/636.90 an ounce by 1130 GMT, up from $635.70, the lowest since January 23, but down from $643.10/643.80 late in New York on Friday.

Gold has lost around seven per cent since hitting a nine-month high of $689 an ounce on February 26.

Analysts said the correlation -- the strength of the relationship -- between gold and equities has become more positive in recent years because of the greater involvement of investors in commodity markets.

So, when risk-averse investors sell their holdings in times of turbulence, gold is included, despite its traditional role as a haven against equity market turmoil, economic and political uncertainty and inflation.

The correlation between markets is rising and there has been a knock-on impact on gold from equity markets, said Tariq Salaria, analyst at Standard Chartered.

It isn't something we've seen in the past, but as we move forward we'll see more of it. Shares on Germany's DAX fell 2 per cent and Britain's FTSE 100 was down 1.7 per cent. Earlier, Tokyo's Nikkei average fell 3.34 per cent, marking its biggest one-day tumble in nine months and a new low for 2007.

But Japan's move to raise benchmark interest rates to a decade-high 0.50 per cent last month has been read by markets as a sign that the era of the cheap yen is drawing to a close.

Conditions are set to remain volatile in the week ahead with traders likely to be sensitive to further selling pressure, Silver fell to $12.50/12.60 an ounce, the lowest since January 17 from $12.89/12.94 late on Friday.

Platinum slid to $1,176/1,181 an ounce, the lowest since February 6, compared with $1,200/1,205 an ounce and palladium was down at $340/345 from $344/349 an ounce.—Reuters