LONDON, July 17: Gold turned lower on Thursday, giving up early gains after equities rallied and the dollar firmed, reducing the appeal of the precious metal as an alternative investment.

Platinum fell to its lowest level since early May with hopes for stronger supplies out of South Africa weighing on prices.

Spot gold hit a day low of $954.90 an ounce, before recovering to $961.80/962.80 from $963.10/964.10 in late New York trades on Wednesday. It hit a four-month high of $987.75 an ounce on Tuesday.

Bank stocks in the United States and Europe have recovered ver the past couple of days, but analysts say many investors remain concerned about financial risks.

Prices fell yesterday due to oil and better equity performance, but there is still a lot of insecurity over the US banking sector which has driven investors back into gold.” Gold is used as an alternative to stocks during times of financial uncertainty.

Dollar weakness has been boosting gold recently, as investors look to hedge against weakness in the US currency.

The dollar firmed on Thursday after banking stocks rallied in response to better-than-expected results from US bank JPMorgan.

A report sovereign wealth funds have been cutting back on dollar exposure has kept gains in check for the US currency, which remains within two cents of its all-time low against the euro.

Lower oil prices have been pressuring gold in recent sessions, with crude now more than $13 a barrel of all-time highs seen last week, reducing the precious metal’s appeal as a hedge against fuel-led inflation.

Platinum fell to its lowest level in over two months after South African state-owned power utility Eskom said it was confident the country would go through the winter months without power cuts.

Energy shortages in the world’s number one platinum producer have boosted prices this year due to concerns mine output would be constrained.

A pullback towards $1800 an ounce in platinum looks likely in the medium term, while palladium looks like it could trade towards $400 an ounce.

Sister metal palladium fell to $424.50/$432.50 from $430.50/438.50.

Silver was steady at 18.71/18.77 from $18.71/18.80.—Reuters