LONDON (AFX) - Gold fell below 600 usd an ounce as safe haven buying ebbed following reports of progress in last-ditch talks between EU and Iranian officials aimed at averting UN sanctions over Tehran's uranium enrichment.
The reports helped push oil prices down to their lowest levels in more than five months and reduced investors' appetite for holding onto bullion as a hedge against oil-induced inflation.
At 11.49 am, spot gold, which earlier hit a low of 592.40 usd, was quoted at 596.15 usd, down from 610.15 usd at the time of the COMEX market close in New York Friday. Other precious metals were lower.
Spot silver was at 11.85 usd an ounce against 12.14 usd Friday, platinum was at 1,211.50 usd against 1,221.00 usd, while palladium was at 317.50 usd against 328.00 usd.
EU foreign policy chief Javier Solana yesterday said talks with top Iranian nuclear negotiator Ali Larijani had been "productive", adding he will meet with Larijani again later this week.
The news took oil prices below 65 usd in London today and put heavy selling pressure on gold, which usually benefits from geopolitical tensions, as it is seen as a safe haven asset by investors.
"The improvement of geopolitical tensions between the EU and Iran as well as the ongoing correction in the oil market seem likely to keep gold under pressure for the time being," said TheBullionDesk.com analyst James Moore.
Moore said gold prices could potentially head as low as 585 usd if support fails to hold around the 200-day moving average of 594.20 usd. Gold futures traded limit down on Asia's TOCOM exchange earlier.
The falls in Asia followed on from weak closing levels Friday, when bullion was swamped by a second day of heavy technical and currency-based selling.
Strength in the dollar is continuing to pressure gold today, dealers noted.
The dollar rebounded against the yen today, and while it has lost some ground against the euro, dealers say it remains well underpinned in the forex markets.
"As we mentioned on Friday, precious metals are more sensitive to the dollar, which looks solidly range-bound for now," said UBS investment Bank analyst John Reade.
A strong dollar usually pressures gold, which is seen as an alternative investment to the US currency. Gold has lost some 6 pct of its value since hitting a month high above 640 usd last week.
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