Gold spiked above the key $600 level on an unexpectedly large cut in Opec oil product, but fell back on Friday after oil failed to hold onto gains, traders said.

“The short-term mood is fairly bullish and whether we can continue to move higher will depend on today and Monday and how strong the upside momentum is,” a dealer said.

“If we don’t manage to see a sustained break of $600, we could see a setback. The target is $605 to $620 but the question is whether we got there directly or whether we have to first build a base between $595 and $600.”

Spot gold was at $598,25/599,25 a troy ounce in late morning trade, up from New York’s $598,40/599,40. Gold had struggled to crack the $600 level all week, with stiff resistance still seen in the $607/610 area.

Some dealers have been disappointed by gold’s relatively poor performance despite investors showing an increased level of risk appetite. “Gold poked its head up to $602 but there was good selling there,” another dealer said.

“Some investors who had been holding on waiting for a chance to get out may have seen this as their opportunity to liquidate and will look for other markets.”

US crude oil futures were sitting just below $59 at $58,65 a barrel in late morning trade, up 15 cents. Opec agreed to slash real production by about 4,3% from September, a bigger cut than the 1 million bpd that had been discussed and its deepest cut since January 2002.

“Oil hasn’t done much after the initial spike following the Opec announcement and we haven’t seen the move many had people had hoped for,” the second dealer said.

“If oil had continued higher, gold may have pushed through. I think the market will drift until the Americans come in,” he said.

Precious metal may be aided by the currency markets — a more traditional driver for gold, which has recently switched its focus more over to the oil market.

“Disappointing economic data are piling up and weakening the dollar. This is further aiding gold,” James Steel, analyst at HSBC said in a daily note.

Financial markets are waiting for a meeting of the US central bank to set interest rates next week. The Federal Reserve is expected to keep rates on hold at 5,25%, standing still for the third straight meeting since halting a two-year tightening campaign in June.

The dollar tumbled on Thursday after data showed a surprise fall in manufacturing activity in the US Mid-Atlantic region that revived concerns about the health of the US economy.

Silver tracked gold lower sinking back below $12 an ounce in late morning trade at $11,96/12,03 versus New York’s $12,04/12,11.

Palladium scored a six-week high overnight at $333 an ounce and was last at $323/327, down from New York’s $327/332.

Most analysts still preferred platinum over palladium given its tighter fundamental situation. Platinum inched lower to $1,081/1,086 from $1,082.