Gold falls below $800 for first time since December

By Lewa Pardomuan

SINGAPORE (Reuters) - Gold tumbled nearly 3 percent on Friday and slipped below $800 for the first time since December 2007 as investors fled precious metals, with their confidence shattered by falling oil prices and a surging U.S. dollar.

Silver, which normally tracks gold, was the hardest hit, falling more than 12 percent to its lowest since last September. Platinum fell 3 percent and palladium was at its lowest in nearly two years. Tokyo's platinum and gold futures hit limit down.

Spot gold hit an intraday low of $787.10, its weakest since mid-December, down from $811.25/812.65 late in New York on Thursday and well below an all time high of $1,030.80 in March.

"The dollar's continuing uptrend is a key factor depressing commodities in general and triggering heavy sales in gold," said Shuji Sugata, manager at Mitsubishi Corp Futures and Securities Ltd in Tokyo.

"Japanese players are dumping their long-term positions after breaking through key levels this week. The market maybe oversold, but the market is still in a downward trend."

Gold has lost much of this year's gains to profit taking, oil's declines from record highs and more recently the dollar's rally against a basket of currencies which reduced the metal's safe-haven appeal.

"It's still early to say it's the end of the super-cycle but if the markets continue to fall like they are doing now, I am sure many people will be talking about it very soon," said Adrian Koh, analyst at Phillip Futures in Singapore.

"The region around $750 is very important because this is a long-term gold uptrend support. So, if it's broken, gold's really gone," he said.

The dollar hit a six-month high against the euro after data showed the euro zone economy contracted in the second quarter and U.S. consumer prices rose at a faster pace in July.

"We'll have some people targeting $750, but I think we would need to see a continuation in that dollar strength to give it sufficient momentum to head that way," said Darren Heathcote of Investec Australia in Sydney.

Oil fell more than $1 to below $114 a barrel on fears about the slowing global economy, with a stronger dollar also prompting funds to exit.

The rising dollar has reduced gold's appeal as an alternative investment while falling oil has diminished the metal's role as a hedge against inflation.

New York gold futures fell $16.00 an ounce to $798.50.

The benchmark contract for June 2009 delivery on the Tokyo Commodity Exchange sank by the daily 150 yen limit to 2,813 yen per gram, its weakest since late November.

(Additional reporting by Chikafumi Hodo in TOKYO; Editing by Clarence Fernandez)