Gold steadied on Monday after an earlier climb to its highest level in more than three months as a weaker dollar and firm oil prices prompted investors to buy the precious metal.
Silver tracking dollar touched a six-month high at $13.56 an ounce, but platinum fell more than $40 an ounce below last Friday's European close at $1,185 an ounce on a technical sell-off as the metal broke through $1,150 an ounce.
Platinum has fallen around 22 percent since hitting the record high of $1,395 an ounce last Tuesday on talk of a platinum exchange traded fund, which could potentially mean the issuer would have to buy up a large chunk of supply. Spot gold at 1710 GMT was quoted firmer at $638.80/639.55 an ounce from $638.10/639.10 in Europe late on Friday. The metal rose to $641.75 an ounce in Asia, the highest since August 11.
"Prices have eased back slightly ... largely tracking movements in the dollar although, overall, they remain well underpinned just below the $640 mark, Barclays said in a research note.
The dollar backed away from a 20-month low hit earlier against the euro and a three-month trough versus the yen, as comments from France's finance minister cooled last week's euro rally. A weaker dollar makes gold cheaper for holders of other currencies. The metal is also often seen as a hedge against inflation.
Oil rose more than one percent towards $60 a barrel after Saudi Arabia's oil minister said Opec may cut output further when it meets on December 14. The gold market was likely to remain choppy on Monday as US investors would return to the market after holidays.
"US traders returning after their long Thanksgiving holiday may look to unwind some weekend longs, taking advantage of the market over $10 higher than Wednesday's close," said James Moore, precious metals analyst at TheBullionDesk.com.
"But the combination of strong technical outlook, weak dollar/firm oil should see gold target $650 in the coming sessions," he wrote in a daily market report. Dealers said firm gold prices were expected to hit physical demand in key consuming nations. The World Gold Council said Saudi Arabia's third-quarter gold demand fell 9 percent to 33.9 tonnes compared with the same period in 2005 as high prices and a downturn in the local bourse dampened sales.
"The market is in a nice upward trend after breaking through a key level today based on the dollar's weakness," said Shuji Sugata, assistant manager at Mitsubishi Corp. Futures and Securities Ltd.
"We are more convinced that the outlook for gold will stay strong in the longer term," Sugata said. Platinum was last quoted at $1,140/1,150 an ounce, but analysts expect physical shortages to support prices going forward.
"We believe the metal remains vulnerable to further spikes and physical tightness due to low metal stocks, an illiquid spot market and price inelastic demand," UBS said in a research note.
Silver was firm, last quoted at $13.46/13.53 compared with $13.39/13.46 on Friday in Europe and palladium was slightly softer at $323/328 from $325/330.