Gold and oil prices on slide as dollar gains further strength

Analysts said another session of plunging equities meant the focus was now on raising cash. "Gold is a safe haven but right now people are just fleeing for cash," said Tetsuya Yoshii, vice president for derivative products at Mizuho Corporate Bank.

Gold for December delivery lost 0.9% to $723.50 an ounce after Merrill Lynch saw a mixed outlook for the metal.

"We believe that in the near term gold will be supported by global economic turmoil and financial uncertainty," Merrill analysts led by Jason Fairclough wrote in a report.

"Looking ahead over the next few years, we see declining mine supply, lower central bank sales, stable fabrication demand, lower producer de-hedging, and slightly lower investment demand."

But Merrill reduced its gold forecast "to reflect a resurgent US dollar and a decline in short-term inflationary pressures".

It cut its 2008 price target to $890 an ounce from $910 but kept its 2009 estimate unchanged at $1000.

Crude oil was little changed in New York overnight but today fell 32 cents to $63.83. Brent was down 60 cents to $61.45 a barrel. Prices are likely to keep falling despite Opec's moves, on fears there will be sharper declines in demand as a global recession bites.

"I expect prices are not likely to stop falling," said Go Endo, Tokyo-based commodity strategist at Fuji Futures.

The dollar, meanwhile, surged against Asian currencies as well as sterling. The pound slid against the greenback and the euro on gloom over the economy.

It had its biggest weekly loss last week since Black Wednesday in 1992 as the economy shrank more than forecast in the third quarter. House prices are falling faster than originally expected.