LONDON, Oct 24: Gold fell nearly 5pc in Europe on Friday as a surge in the US dollar curbed interest in the precious metal as a currency hedge, and oil prices fell more than $2 a barrel.

Platinum and silver tumbled 5 per cent and 8 per cent in gold’s wake to touch multi-year lows.

Spot gold fell to $684.90 an ounce, a new 13-month low, before recovering to trade at $686.20/688.20. It was quoted at $720.00 in New York late on Thursday.

Gold is following the dollar and oil, Wolfgang Wrzesniok-Rossbach, head of sales at precious metals trading house Heraeus, said.

Buying in the biggest gold market, India, is particularly soft ahead of the festival season there due to weakness of the rupee.

Gold has slipped some $180 or 20 per cent from a month ago, pressured by a recovery in the dollar and a sharp slide in oil prices.

The other main external driver of gold, oil prices, were also negative for the metal, with oil falling below $64 a barrel on Friday, to new 16-month lows on gloom about a global economic downturn and despite an Opec agreement to cut output.

Gold is likely to remain under pressure.

In New York, bullion holdings of the world’s largest gold-backed exchange-traded fund, the SPDR Gold Trust slipped 1 per cent to 747.06 tons on Thursday.

Gold demand from ETFs, which issue securities backed by physical bullion, has been a major plank of support for prices in recent years.

Among other precious metals, silver tumbled nearly 10 per cent to a session low of $8.74, its weakest level since January 2006, tracking losses in gold. It was later trading at $8.77/8.85 against $9.66.

Platinum meanwhile slumped to a near five-year low of $752 an ounce, as the firmer dollar added to existing pressure on the metal from a fall in demand linked to expectations for slowing economic growth.

The white metal, primarily used in the manufacture of catalytic converters, has shed more than 50pc of its value since August on fears of slowing demand from the automotive sector.

Platinum was quoted at $757/777, down from $802.50, while palladium was at $166/176, against $165.50.

Although silver and platinum group metals are trading cheap relative to gold we would not expect these markets to start outperforming gold until inflation takes hold, Deutsche Bank said in a note.—AFP