were down around half a percentage point.
Spot gold touched $633.00, the lowest since January 23, compared with $643.10/643.80 late in New York on Friday.
By 1530 GMT gold had trimmed earlier losses as U.S. stocks bounced and was at $638.80/639.55, still a loss of around seven percent since a nine-month high of $689 an ounce on February 26. Analysts said the correlation — the strength of the relationship — between gold and equities has become more positive in recent years because of the greater involvement of investors in commodity markets.
So, when risk-averse investors sell their holdings in times of turbulence, gold is included, despite its traditional role as a haven against equity market turmoil, economic and political uncertainty and inflation.
Story Continues Below
"The correlation between markets is rising and there has been a knock-on impact on gold from equity markets," said Tariq Salaria, analyst at Standard Chartered.
"It isn't something we've seen in the past, but as we move forward we'll see more of it."
The U.S. Dow Jones industrial average <.DJI> was up 34.76 points at 12,148.86, the Standard & Poor's 500 Index <.SPX> was up 0.87 points at 1,388.04 and the Nasdaq Composite Index <.IXIC> was up 2.34 points at 2,370.34.
CHEAP YEN
Traders said gold has been sold over the last week to pay for losses on equity markets.
"Some people have had to take their profits on gold to meet margin calls on stocks," a trader said. "It's the good for bad trade ... It started last week when China stocks collapsed."
The Shanghai market fell nearly nine percent last Tuesday on talk that government would clamp down on speculation.
That was reinforced by perceptions that liquidity created by cheap money which has fuelled the commodity and equity market bull run for years now is about to be withdrawn.
Investors have for years been able to borrow yen at low interest rates and invest the proceeds in higher yielding riskier assets — known as the carry trade.
But Japan's move to raise benchmark interest rates to a decade-high 0.50 percent last month has been read by markets as a sign that the era of the cheap yen is drawing to a close.
"Conditions are set to remain volatile in the week ahead with traders likely to be sensitive to further selling pressure," TheBullionDesk.com said in a research note.
Silver fell to $12.57/12.640 an ounce, up from an earlier $12.38, the lowest since January 17 and compared with $12.89/12.94 late on Friday.
Platinum was at $1,164/1,169 an ounce, up from an earlier $1,159, the lowest since February 5 and compared with $1,200/1,205 an ounce on Friday.
Palladium was down at $336/341 from $344/349 on Friday.
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