By Lewa Pardomuan
SINGAPORE (Reuters UK) - Gold dropped on Wednesday as speculators booked profits after the metal rose to a four-month high the previous day, while platinum fell 2 percent on fears of weakening demand for autocatalysts.
Jittery stock markets, worried about the future of U.S. mortgage lenders Fannie Mae (FNM) and Freddie Mac (FRE), record-high oil, Middle East tensions and a volatile dollar, have pushed up gold prices to a level not seen since March.
Gold fell to $970.80/971.70 an ounce from $975.90/977.90 an ounce late in New York. Gold rose to $987.75 an on Tuesday, its highest level since March 19, before a drop in oil and declines in other commodities erased some of the gains.
Gold struck a lifetime high of $1,030.80 in March.
"It's a very volatile market. I think people are more cautious about the oil prices, the dollar," said Ellison Chu, senior manager at Standard Bank London in Hong Kong.
"I think we may have a chance to see $995 or something like that. On the downside, we can still go back to $960."
Oil was little changed around $139 a barrel on Wednesday ahead of U.S. government inventory data, after tumbling more than $6 on growing concern over the United Stateseconomy stirred demand worries. The euro dipped to $1.5907, off a record high of $1.6040 hit the previous day.
Spot platinum fell to $1,933.50/1,953.50 an ounce from $1,971.00/1,991.00 late in New York after fears of falling demand resurfaced as the U.S. economy fades. Platinum hit a record of $2,290 an ounce in March.
"After seeing sharp falls in stock prices, investors are becoming increasingly concerned about the outlook for the economy, which is leading to the selling of platinum," said Tatsuo Kageyama, analyst at Kanetsu Asset Management in Tokyo.
"Falling car sales in the United States due to high oil prices are another key factor hurting sentiment," he said.
The most active Tokyo platinum contract for June 2009 delivery on the Tokyo Commodity Exchange ended the morning session 294 yen per gram lower at 6,421 yen -- well below a record high of 7,427 yen hit in March.
News that Toyota Motor Corp and General Motors Corp (GM) expected declines in sales weighed on platinum, which is a major component in autocatalysts, said Kazuhiko Saito of Interes Capital Management in Tokyo
"Platinum demand will decrease. I think the New York spot price will reach $1,900 tonight. There's panic," he said.
Gold futures for August delivery on the COMEX division of the New York Mercantile Exchange fell $6.3 an ounce to $972.4.
(Additional reporting by Chikafumi Hodo in TOKYO; Editing by Michael Urquhart)
