Gold slipped on Friday in jittery trade as the US dollar held to New York gains, while platinum dropped more than 2 percent on persistent selling in Japan following this week's report by Johnson Matthey.
Spot gold inched down to $617.20/618.20 from $618.00/619.00 in New York on Thursday, when the dollar gained after US government said consumer prices fell by a greater-than-expected 0.5 percent in October.
"I reckon we may hit $610 and trade below that. Resistance is going to be around $630, and I think oil can become more an issue again should it break $60," said a dealer in Sydney.
Gold fell nearly $6 in the US market after the dollar reversed course and strengthened on the CPI data. It has lost more than 2 percent in value since rallying to a two-month high of $636.50 last week. The dollar was little changed from late New York trade around 118.25 yen, having risen as high as 118.35 yen on Thursday, near this month's peak of 118.60 yen.
The euro edged down to $1.2785, off the 2-1/2-month peak of $1.2901 hit last week. Platinum fell more than 2 percent and hit a low $1,160 an ounce, led by selling in Japan, where most active contract on the Tokyo Commodity Exchange, currently October 2007, fell to its lowest in nearly a week at 4,302 yen per gram.
Spot platinum was last quoted at $1,188/1,192 in New York.
Declines in platinum futures also inspired selling in Tokyo gold futures.
Benchmark gold futures, currently October 2007, fell 23 yen per gram to 2,374 yen per gram. Johnson Matthey, the world's biggest distributor of platinum, said in its Platinum 2006 Interim Review that supply and demand for platinum are likely to reach record levels in both 2006 and 2007, leaving the global market close to balance.
It saw prices of platinum hovering between $980 and $1,200 an ounce in the next six months. Platinum upped to a record high of $1,336 an ounce in mid-May. But Sonoda Yukuji Sonoda, precious metals analyst at Daiichi Commodities in Tokyo, said the outlook for platinum remained bullish with a move by main producer South Africa to cut rates in a new royalty bill likely to restrict output.
"The price forecast disappointed people but the reality is quite different. I personally believe next year's highest price is $1,500," he said.
South Africa, the world's biggest producer of gold and platinum, slashed rates of proposed mining royalties in mid-October to lessen the impact of a controversial tax based on company revenues.
South Africa's mining industry was strongly opposed to the new royalty tax when a plan was first unveiled in 2003, and has been anxiously awaiting a final version of the bill. Mining companies have been lobbying for the royalty to be based on profits, saying a royalty on sales would hurt less-profitable mines and have a big impact during a mine's start-up phase.
The royalties were due to come into effect in 2009. The royalty rate on refined gold in the new draft bill was cut in half to 1.5 percent and on refined platinum group metals reduced to 3.0 percent from 4.0 percent in the original bill released three years ago. Silver dropped to $12.77/12.84 an ounce from $12.85/12.92 late in New York. Palladium fell to $315/320 an ounce from $318/323.