LONDON, Nov 16: Gold regained strength on Friday as bargain hunters and investors resurfaced to take advantage of the metal’s sharp drop the previous day.

Dealers expected volatile trade ahead, following gold’s fall to its lowest level in two weeks to $782.35 on Thursday -- a drop of more than $35 after the metal hit an intraday high of $817.90 on buying interest from Japanese and US investors.

Spot gold rose to $790.40/791.10 an ounce from $785.80/786.60 late in New York on Thursday, when a bounce in the dollar and lower crude oil ignited heavy profit taking.

Gold has already started to push up from the overnight lows and an end to the week above $800 is by no means out of the question, said Tom Kendall, metals strategist at Mitsubishi Corporation.

Although we do not discount the possibility of another round of liquidation, the heavy selling seen in the past days has shaken a lot of longs out of the market. Sub-$800 prices are also starting to look attractive for jewellery buyers and mine de-hedgers.

Gold was trading below this year’s peak of $845.40 hit on Nov. 7 -- the metal’s best level since January 1980 when it struck a record high of $850. Gold is seen in a correction mode after hitting the 28-year high, dealers said.

The dollar marginally gained on Friday against the euro. Gold often moves in the opposite direction of the dollar and is generally seen as a hedge against oil-led inflation.

The October 2008 delivery contract in Tokyo tumbled by the daily 120 yen per gram to 2,814 yen as the yen’s gains against the dollar ignited selling.

The most active December gold contract on the US futures market gained $3.9 an ounce to $791.1.

The financial year end in many financial institutions occurs at the end of this month. Historically this has been a period where investor positions are scaled back, which in our view exposes the gold price to a short-term correction.

Spot platinum fell to $1,426/1,431 an ounce from $1,428/1,432 New York. Earlier this week, a correction in gold pulled platinum down to a one-month low of $1,385.—Reuters