Gold was softer on Friday but recovered from a more than 1 percent dip earlier in the day, as Wall Street equities opened lower and the dollar retreated from session highs. Spot gold eased to $957.40/958.40 an ounce at 1438 GMT from $962.10/963.10 an ounce late in New York on Thursday, having earlier slipped as low as $949.50 an ounce.
The precious metal slipped to a one-week low in early afternoon trade after better-than-expected earnings from the US' largest bank, Citigroup, boosted the dollar and sent equity markets higher in Europe. But a dip in stocks when Wall Street opened, as the market reacted to disappointing earnings from Microsoft and Google released after the bell on Thursday, boosted interest in the metal as an alternative investment to equities.
"In the last few weeks, where the equity markets started to tumble, gold has started to shoot up, so there has been a good link," said Standard Chartered analyst Dan Smith. Other commodities such as copper, aluminium and wheat were also lower.
Spot platinum slipped on Friday for a fifth successive day, after supply fears linked to an electricity shortage in South Africa receded. The South African treasury said it will lend the state-owned power utility Eskom 10 billion rand in the 2008/09 financial year to help it expand its generating capacity. Eskom already helped ease supply fears on Thursday, after it said it does not expect further power cuts in the republic this season.
An electricity shortage in South Africa, which produces four out of five ounces of global platinum supply, sent the white metal to an all-time high of $2,290 an ounce in March as investors worried about the outlook for production. Prices have fallen around $170 an ounce, or 8.5 percent, from late last Friday as the market factors in a weaker picture for the US auto market this year.
Platinum is a major component in autocatalysts, and any reduction in car manufacturing is likely to weaken demand. "From both a demand and supply perspective, the fundamental picture has turned more bearish than was the case in (the first half of) 2008," said Standard Bank analyst Walter de Wet in a note from Johannesberg.
Spot platinum fell to $1,855.00/1,865.00 an ounce from $1,881.00/1,901.00 late in New York on Thursday, having hit a session low of $1,836.50, its weakest level since May 2. Among other precious metals, spot palladium slipped to $417.00/422.00 an ounce from $420.00/428.00 an ounce, while silver edged down to $18.32/18.37 an ounce from $18.39/18.48 late in New York.