Gold fell below $960 an ounce on Friday on a recovery in stock markets, but tensions in the Middle East and worries about rising energy costs were likely to limit losses.

Platinum fell to an 11-week low as a sell-off in Tokyo futures put pressure on spot prices. The metal has lost more than 19 per cent in value since rallying to a lifetime high of
$2,290 in March after power shortages disrupted mining in main
producer South Africa.

Gold fell to $956.50/957.50 an ounce from $962.10/963.10 an ounce late in New York on Thursday - off a four-month high of $987.75 an ounce hit on Tuesday.

But uncertainty over the US financial system and fears of military confrontation between Iran and Israel that had sent oil to record highs would still support gold, said Yukuji Sonoda, precious metals analyst at Daiichi Commodities.

"As long as there's this possibility, the oil price will not decrease that much. This is also a good support for gold. Gold's bottom price is $900 and for oil, it is maybe $120," he said.

Investors buy gold as a hedge against inflation, and fears of rising energy costs helped propelled the metal to a lifetime high of $1,030.80 in March.

"I don't think the oil market is going to fall much further in near-term, so that will help the gold market," said Mark Pervan, senior commodities analyst at ANZ in Melbourne.

The Nikkei average rose 0.4 percent on Friday, as a softer yen lifted exporters. In theory, strong equity markets dim gold's appeal as an alternative investment.

Spot platinum fell to $1,853.00/1,873.50 an ounce from $1,881/1,901 late in New York on Thursday, having hit an intraday low of $1,849.50 an ounce - its lowest level since May 2.

Platinum is suffering from a gloomy outlook for the global economy, deepening fears over demand from carmakers for autocatalysts, a major use for platinum.-Reuters