LONDON, March 15: Gold moved higher on Thursday, tracking a rise in oil prices and a rebound by stocks, but investors remained wary because of the metal's recent erratic trading pattern.

Gold rose to $647.00 an ounce before easing to $646.20/647.20 against $643.00/643.75 in New York late on Wednesday, when it fell to a one-week low on tumbling shares that raised fears about another flight from risk.

There seems to be a clear parallel at the moment between stock market sell-offs and gold sell-offs, but we think that the relationship will break down eventually, said David Holmes, director of precious metals sales at Dresdner Kleinwort.

Gold is often seen as a hedge against oil-led inflation. Analysts said gold was pivoting at the $650 level, with a dip below that price attracting institutional and physical buyers and a move above resulting in profit-taking on worries that the metal might not make much more progress.

I don't know that this sort of relatively moderate recovery we've seen this morning is the sign that the gold price has passed its bottom, said David Moore, commodity strategist at the Commonwealth Bank of Australia.

The metal rallied to a nine-month high of $689 on Feb. 26 as growing tensions between the United Nations and Iran over that country's nuclear ambitions prompted investors to buy gold.

Bullion investors watched European and Asian stock prices, which rose sharply after steep losses the previous day.

Palladium was up $3 at $348/353 an ounce. — Reuters