Gold chopped back and forth today, knocked down by weaker oil prices at one point but later helped by bargain hunting and physical buying.

But traders retained a cautious stance, predicting the metal was vulnerable to further declines in the days ahead. “I still see a downside but I don’t think it’s the start of a bear run. It’s just a correction. Certainly metals will recover towards the end of the month,” Tony Dobra, a director at Standard Chartered Bank, said.

“We have come down a lot but we are still way above where we started the year,” he said, referring to a price level of $517 in early January.

Spot gold dropped to as low as $572,30 an ounce — not far above a near three-month low of $571,20 an ounce hit on Friday — before climbing to $583,00.

It was quoted at $581,10/582,10 by afternoon trade, compared with $576,70/578,20 late in New York yesterday, when it fell more than 1% on fund selling.

Traders said gold was under pressure due to oil, which slid to fresh six-month lows on rising winter fuel stocks and waning concern over Iran. Prices have retreated over $17 from a July record high of $78,40 in the steepest decline for 15 years.

The unwinding of positions linked to billion-dollar losses at a prominent US-based hedge fund, Amaranth Advisors, may also be contributing to the slump in oil prices, traders said.

“If oil trickles down further, gold can come down again. People are a bit wary about going too long here at the moment, but longer term I am still fairly friendly towards gold,” said a precious metals dealer in London. A drop in oil prices reduces gold’s appeal as a hedge against inflation.

In other precious metals, silver fell as low as $10,67 an ounce before jumping to $11,04/11,14, up from $10,80/10,87 in New York.

Platinum fell to $1,225,50 an ounce, its lowest level since June 20, and was last quoted at $1,130/1135, against $1,150/1,155. Palladium slipped to $306/312 an ounce from $312,50/317,50 late in New York.