Gold down on oil and dollar; platinum at 3-year low

By Lewa Pardomuan

SINGAPORE (Reuters) - Gold fell more than $5 on Monday, moving toward a two-week low hit last week, as crude oil dropped on demand fears and the dollar jumped to a 13-month high against the euro, dimming bullion's safe-haven appeal.

Platinum extended losses and tumbled to its lowest in almost three years on economic weakness and dismal car sales, especially in the United States. Silver tracked gold lower, while palladium firmed on bargain hunting.

Gold was trading at $829.40 an ounce, down $5.40 from New York's notional close on Friday, when it hit a two-week low of $818.70 after the U.S. House of Representatives voted to pass a $700 billion package to bailout the U.S. financial system.

"I guess the most important factor is the U.S. presidential election in November and what the next president is going to do about the economy. We don't know yet," said a dealer in Hong Kong.

"We saw a little bit of physical buying because the market is below the recent high. That's why we don't fall that much today," said the dealer, referring to demand from jewelers.

Gold hit a two-month high of $920 an ounce in late September before gradually falling on a rebound in the U.S. dollar. The metal was below a record high of $1,030.80 struck in March.

Investors also booked profits, with holdings in the world's largest gold-backed ETF, the SPDR Gold Trust, showing a drop to 739.95 tonnes as of October 6 from 755.26 last week..

"If currencies such as the euro and the pound continue to move lower, and the dollar higher, then I guess we would see more downside pressure on gold," said Adrian Koh, an analyst at Phillip Futures in Singapore.

"Apparently, the $820 levels will be the near-term support to look at. If we do move below those levels, we will probably be heading back to the 800 levels very soon," said Koh, referring to levels last seen in September.

Oil fell 2 percent on fears that efforts aimed at containing the spreading credit crisis would fail to stave off a deeper decline in oil demand.

The euro fell to a 2-1/2-year low against the yen as investors shifted their focus to banking problems in Europe after leaders of the region's four biggest economies decided against a coordinated bank bailout.

Platinum was trading at $925.00 an ounce, down $2.63 from New York's notional close, having hit a low of $920.00 an ounce, its weakest since November 2005.

"I think the outlook for platinum remains weak and the effect of the credit crisis is also going to weigh on platinum more than gold," said Koh of Phillip Futures.

"I don't have any nearby supports, and I have to look all the way back to the 2005 periods for indications. Probably around the $920, then $900 levels," he said.

Platinum last hovered at $900 in September 2005.

Platinum prices have tumbled more than 50 percent since hitting a lifetime high of $2,290 in March, when speculators bought the metal on supply worries following a power crisis in main producer South Africa.

New York gold futures added $0.9 an ounce to $834.1 an ounce on the COMEX division of the New York Mercantile Exchange.

(Editing by Clarence Fernandez)