Gold sold off again in Asia on Friday, pushed lower by further falls in US and Japanese equities, before rising $663 as the London session got started.

In China's markets, blamed for the global sell-off after falling 9% on Tuesday, Shanghai stocks rose 1.3% today. Hong Kong ended its 5-day losing streak.

The Nikkei share index, on the other hand, just closed lower for 2007, with export stocks down following the Yen's 4% rise.

In Tokyo, the benchmark Dec. gold contract fell by its daily limit, dropping ¥60 to ¥2,522 per gram – equivalent to $689 per ounce.

"Just one week ago, the gold market seemed so bullish and lots of individual investors bought Tocom gold," says Masami Aratake at Himawari CX, a brokerage Tokyo.

"Now many of them are trying to bail out as margin calls [on equities] kick in."

"Gold used to be a safe-haven during times of uncertainty in the financial market," adds a market analyst at Kazaka Commodities. (Untrue – click here for the facts about gold's "safe haven" appeal...)

"But not any more," he went on. "People are more interested in locking in profits in commodities to cover losses in stocks now. Gold will stay weak as long as share prices are unstable."

Looking ahead, technical analysts say this week's drop – even through the $660 level for the first time in 10 days – has yet to prove significant.

A decline "below $655 would be the first damaging sign," according to Barclays Capital in London, "because this would break the pattern of higher highs and higher lows in place since Jan. 5.''

Mitsui in Sydney add that "given the metal’s inability to recover into the $680s, further weakness may be expected. Nearby resistance is likely to be expected to start from $670 and scaled up towards the $680/$690 band.

"The next level of support is pegged at the $650/$656 band."

Versus the Pound, gold dropped below £340 for the first time in 10 days as New York drew to a close last night. Eurozone prices, down nearly 4% from Monday's top, have so far held above €500 per ounce.

"Gold investors are just nervous now," reckons Ellison Chu, manager of precious metals at Standard Bank Asia.

"There are lots of rumors in the market about selling from equity investors or commodity funds."

Gold sales amid sharp drops in other assets are only to be expected – and blow-offs in other markets put short-term gold gains at risk.

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