Gold touches three-month low in London

Gold hit its lowest in more than three months on Wednesday and silver touched its weakest in more than five months as commodities were hit by the latest wave of risk aversion in global financial markets.
Gold has traditionally been seen as a haven for investor money but more recently has been put in the same category as other commodities, which are considered risky investments.
"We've seen this countless times. When there is a whiff of risk aversion...gold like any other commodity tends to get affected by long liquidation and that's what we're seeing," said Robin Bhar, metals analyst at UBS Investment Bank.
Spot gold fell as low as $638.90 an ounce in Asian trade, its weakest since mid-March, but later stabilised. Prices were at $642.00/642.60 by 1403 GMT, unchanged from late levels in New York on Tuesday. Spot silver dropped to $12.11 an ounce, its lowest since January 8, but was last at $12.28/12.32 versus $12.24/12.27.
Base metals also softened, with London Metal Exchange copper futures easing by around one percent, while crude oil fell below $70 a barrel . The yen rose broadly for a third straight day as volatile global stock markets and continued concerns about the US subprime mortgae sector made investors more wary of risky carry trades.
"Behind the slump in the New York (gold futures) market is risk aversion," Satoshi Matsunaga, analyst at Mitsui Bussan Futures Ltd's investment strategy section, said, adding that this was reflected in a fall in gold bullion holdings in the StreetTRACKS exchange-traded fund (ETF).
Simon Weeks, bullion director at ScotiaMocatta, said it was the biggest one-day decrease in the fund since its creation just over two years ago. ETFs allows investors to gain exposure to gold bullion via an exchange, making the investment a little less risky than a pure play on the gold futures market.
Data showed that holdings in StreetTRACKS' New York product dropped just over 11 tonnes to 463 tonnes. Traders and analysts also noted that spot gold had fallen through the important 200-day moving average technical level around $641.
"If it were to stay at this level when the US market opens, you could see momentum sellers starting to go short," Bhar said, adding that gold risked a push right down to $630-620 - levels unvisited since January.
"But we think $620 is where you then start to buy again." Weeks said seasonal physical demand, which had been a good source of support when the market has stumbled recently, was starting to fizzle out. He added, however, that there was still good buying in the market in the mid-$630s.
Platinum hit its lowest in nearly a month at $1,261 an ounce. It last stood flat at $1,266/1,270, little changed from New York's $1,265/1,269. Dealers are keeping a close eye on wage negotiations in top producer South Africa although analysts say the platinum market may have already priced in the effects of limited disruptions. Palladium was at $362.50/366.50 an ounce versus $363.20/367.20.