Gold dipped to another three-month low on Friday on weaker oil, and investors remained nervous after the metal's persistent weakness this week, while palladium shed as much as 10 percent at one point.

Analysts saw prices touching further lows in the short term and trading in a range before resuming an upward path. Gold has shed 10.7 percent in just more than a week.

"This has been quite a shock to a number of people. It's the second big drop this year and it will take time for sentiment to recover," said Stephen Briggs, economist at SG Corporate and Investment Banking.

"The dollar is not declining despite what everybody is expecting, geopolitical tension is much less pronounced than it was and because oil has declined, there is slight disenchantment with commodities," he added.

Spot gold was quoted at $578.30/579.80 in New York after falling to $571.25 an ounce, its lowest since June 20. That compared with $576.40/7.90 late on Thursday, when it dropped nearly 2 percent.

Gold has lost more than 20 percent since hitting a 26-year high of $730 in mid-May, when investors poured money into the market as a hedge against global tensions, including those over U.S.-Iran relations, high oil prices and dollar instability.

Palladium lost 10 percent earlier, hitting a low of $293 an ounce before recovering to $308/313, versus $325/330 previously.

"Palladium went down as everything else came off. There is nothing in particular behind it," a trader said.

A second dealer said: "This was probably a liquidity issue. We hit a few stops and down we went."

Oil hovered around $63 a barrel, weighed down by bulging natural gas and heating oil inventories in the United States and the suspension of an oil workers' strike in Nigeria.

"People are nervous. They throw gold away because they don't know what's going on. There's a panic liquidation. The next levels that people are looking at are $550, $545 and $530," said a dealer in Singapore.

"But I don't think metal players are that negative. I don't think we are going to hit $500 and below it. That kind of scenario is not present at the moment. People are just frightened by the speed of the fall in prices," he said.

Other precious metals tracked gold, with silver hitting an eight-week low before bouncing back, platinum dropping to a level not seen in three months and palladium tumbling 6 percent.

Silver fell to its lowest level since July 19 at $10.42 an ounce, but it later bounced to $10.72/10.79, against $10.69/10.76 late on Thursday.

Platinum hit a level not seen in nearly three months at $1,138 an ounce before ticking up to $1,157/1,162 an ounce, off from $1,181/1,186.