(Updates to afternoon) 
    SINGAPORE, Dec 13 (Reuters) - Gold dropped in volatile trade 
on Thursday, led by declines in stock markets although sentiment 
was still upbeat after it rallied to its highest in two weeks the 
previous day. 
    Spot gold <XAU=> dipped to $810.60/811.30 an ounce from 
$813.50/814.20 in late New York on Wednesday, when it hit a high 
of $817 after the U.S. Federal Reserve and other central banks 
announced new plans to ease liquidity in the financial markets. 
    The Fed on Wednesday announced the creation of a temporary 
short-term lending facility to ease credit market strains in 
concert with market-calming actions by the European Central Bank 
and the central banks of Canada, England and Switzerland. 
    "Whilst more money slushing around the banking system will 
alleviate the liquidity issues it also means more spending power, 
and with it the potential for inflation and higher gold prices," 
said Investec Australia in a daily report. 
    "However we feel that the fact that this move by the central 
banks should help ease some of the tensions in the credit 
markets, hence Investors will be less likely now to be driven 
into gold for safe haven reasons and hence pair back our price 
expectations for year-end." 
    Investec had expected the gold price to rise as much as $30 
over the next couple of weeks. 
    Scepticism over plans by major central banks to tackle tight 
credit conditions put pressure on Asian stock markets. Tokyo's 
Nikkei <.N225> fell 1.18 percent, while MSCI's measure of other 
Asia Pacific stocks <.MIAPJ0000PUS> eased 0.2 percent. 
    "Gold seems to follow the Dow Jones. Sentiment is slightly 
bullish but players are wary of some kind of year-end book 
squaring," said Ronald Leung, director of Lee Cheong Gold 
Dealers. 
    "I think support is $800 an ounce and resistance at $820," he 
said. 
    Doubts that the plan would completely solve the credit 
problems chipped away gains on Wall Street, where both the 
blue-chip Dow <.DJI> and tech-laden Nasdaq Composite Index 
<.IXIC> ended just slightly higher on Wednesday. 
    Gold traditionally has been used by investors as protection 
against economic and political uncertainty. But it can sometimes 
behave much like other financial assets because of the growing 
role of commodities in diversified portfolios. 
    The dollar fell to 111.88 yen <JPY=> but held near a 
one-month high of 112.48 yen hit on electronic trading platform 
EBS on Wednesday. The euro edged up to $1.4720 <EUR=>. 
    The most-active February contract <GCG8> on the COMEX 
division of the New York Mercantile Exchange fell $3.6 to $815.2 
per ounce during early Asian trade. 
    The benchmark October 2008 gold contract <0#JAU:> on the 
Tokyo Commodity Exchange ended the morning session 38 yen per 
gram higher at 2,939 yen. 
    In industry news, Papua New Guinea gold miner Lihir Gold Ltd 
<LGL.AX> cut its 2007 production forecasts by 7 percent to 
700,000 ounces due to unplanned maintenance shutdowns, the 
company said in a statement on Thursday. [ID:nSYD16109] 
    Platinum <XPT=> was little changed from late New York at 
$1,472/1,476 an ounce. Palladium <XPD=> eased to $346/350 an 
ounce compared with $348/351 in late New York.  
    Silver <XAG=> fell to $14.60/14.65 an ounce from $14.64/14.69. 
  Precious metals prices at 0307 GMT 
 Metal             Last    Change  Pct chg  YTD pct chg  Turnover 
 Spot Gold         810.70   -2.60   -0.32     27.53 
 Spot Silver        14.62   -0.03   -0.20     13.77 
 Spot Platinum    1473.00    0.00   +0.00     30.12 
 Spot Palladium    346.00   -2.00   -0.57      4.22 
 TOCOM Gold       2939.00   38.00   +1.31     20.20        43334 
 TOCOM Platinum   5162.00   59.00   +1.16     21.34        19476 
 TOCOM Silver      530.90    6.50   +1.24      7.62          362 
 TOCOM Palladium  1272.00   21.00   +1.68      1.35          306 
 Euro/Dollar       1.4722 
 Dollar/Yen        111.95 
 TOCOM prices in yen per gram, except TOCOM silver which is 
priced in yen per 10 grams. Spot prices in $ per ounce. 
  (Reporting by Lewa Pardomuan) 
  (Additional reporting by Miho Yoshikawa in Tokyo; Editing by 
Jacqueline Wong) 
 (([email protected]; +65 6870 3834;  Reuters 
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