Gold steadied in early trade on Friday after falling overnight to its lowest level in nearly three months, but analysts said weaker oil prices and moves in the dollar might further drag down prices.

“Short-term sentiment is building towards the downside,” said James Moore, precious metals analyst at TheBullionDesk.com.

“We have got oil prices in retreat and the dollar has been relatively firm. We have seen an improvement in geopolitical tensions. Investors are looking at the market and thinking there is not really the necessity to hold gold.”

Spot gold fell to $572,10 an ounce in Asia, its lowest since June 23, and was at $576,90/578,40 in early trade, against $576,40/577,90 late in New York on Thursday, when it dropped about 2%.

Gold has lost over 20% since spiking to a 26-year high of $730 in mid-May, when investors poured money into metals as a hedge against global tensions, including those over US-Iran relations, high oil prices and dollar instability.

Oil stayed near $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.

Weaker oil prices undercut gold’s appeal as a hedge against inflation. The metal also moves in the opposite direction of the dollar.

"It looks like the good time has stopped. The momentum is weak enough that people start selling. $543-$544 are key levels to watch,” said Tobin Gorey, a commodities analyst of Commonwealth Bank of Australia in Sydney.

Mining shares fell in Australia. Newcrest Mining lost 1,33%, gold and copper miner Oxiana dropped 2,2% and Lihir Gold slipped 3,3%.

Gold’s 14-day relative strength index (RSI) stood at 20,18 on Thursday, down from 24,46 on Monday. The market views an RSI of 30 or less as oversold and 70 or more as overbought.

In other precious metals, silver fell to its lowest level since July 19 at $10,60 an ounce in Asia, but later rose to $10,75/10,82, against $10,69/10,76 in New York.

Platinum hit a level not seen in nearly three months at $1,161 an ounce before rebounding to $1,164/1,169 an ounce, still down sharply from $1,181/1,186 late in the US market.

Stillwater Mining, the only US producer of palladium and platinum, said employees at its East Boulder Mine in Montana will return to work on Friday following closure of the facility from Wednesday evening through Thursday due to a wildfire.