Singapore: Gold extended losses into a third session on Friday and was headed for a weekly drop on expectations that plunging oil prices could sap inflationary pressure, curbing the metal`s appeal as a hedge.
FUNDAMENTALS
* Spot gold had fallen 0.3 percent to $1,187.40 an ounce by 0037 GMT. The metal has lost about 1 percent for the week, snapping a three-week rally.
* Oil hit four-year lows around $70 a barrel on Thursday, as OPEC resisted the temptation to cut back production following the more than 30 percent plunge in prices since June.
* Gold is seen as a hedge against inflation.
* Also weighing on gold was a firmer dollar, which made notable gains versus the Canadian dollar and Norwegian crown due to the slide in oil.
* Investor outflows resumed in SPDR Gold Trust, the world`s largest gold-backed exchange-traded fund, on Wednesday after a week with holdings of the fund hitting a six-year low, reflecting weak market sentiment.
* Caution prevailed ahead of Sunday`s Swiss vote on central bank gold reserves. The vote is aimed at preventing the Swiss National Bank from offloading its gold holdings and obliging it to hold at least 20 percent of its assets in gold, compared with 8 percent last month.
* The most-recent opinion poll showed support among Swiss voters for the initiative had slipped to 38 percent, weighing on prices.
* A surprise `yes` vote, however, could prompt the Swiss central bank to buy about 1,500 tonnes of gold over the next few years, boosting bullion prices, analysts say.
* Deutsche Bank is winding down its physical precious metals trading business, moving to further scale back its exposure to commodities. The bank will retain some precious metals capability though its financial derivatives business.
MARKET NEWS
* Oil prices, oil-related shares and oil-linked currencies all tumbled in Asia on Friday, in the wake of OPEC`s decision to refrain from cutting output despite a huge oversupply.
