NEW YORK, July 24 (Reuters) - COMEX gold futures recouped some of their early losses on Wednesday after sliding to three-month lows on fund selling.
Once a technical rout had run its course, prices rebounded as attention returned to the fundamentals of plummeting share prices and a falling dollar, traders said.
Benchmark August gold futures at the New York Mercantile Exchange were down $2.70 an ounce to $309.9, after sinking earlier to $306.70, its lowest point since April 26.
Spot gold > slid to its lowest level since May 15 at $307.50 an ounce, a steep drop from $313.25/3.75 an ounce in late Tuesday dealings in New York. It steadied around $309.60 to $310 an ounce.
Futures prices lifted off their medium-term lows after Wall Street stocks opened to renewed selling that sent major U.S. equity indexes to levels unseen since April 1997.
Still, gold held well below recent highs and below last nights' closing levels.
Wednesday's early gold fix was $313.60 an ounce.
Traders said Wednesday's early sharp declines were a continuation of the fund selling that spooked the gold market on Tuesday afternoon when the dollar strengthened.
In a purely technical play on Wednesday, stop-loss orders were set off at $310 an ounce, which then triggered a slew of other sell orders in a market that had recently piled up long positions in a price run up.
"We had a deep sell off yesterday (Tuesday) with the strength in the dollar. Obviously that long liquidation continued as they hit those round of stops below $310," said David Meger, metals analyst at Alaron Trading in Chicago.
The early selling frenzy started feeding on itself with the falling spot metal price sending gold share prices lower, which in turn caused more selling of the gold metal outright.
For example, South Africa's gold shares index extended its losses to more than 12 percent on Wednesday, dragged down by the tumbling spot metal price.
Then, benchmark North American gold and silver mining index traded on the Philadelphia Stock Exchange fell to Wednesday's low of 56.05, but later moved back to trade around 58.45, down about 1.33 percent.
Silver tracked gold prices lower.
COMEX September silver futures sank 3.8 cents to $4.845 an ounce, after trading down to $4.825. The session high was $4.915. Spot silver fell to $4.83/85, off its last close at $4.87/89. Wednesday's fix was $4.86, down 12.75 cents.
Some analysts said a technical breakdown would mean a drop below $4.80 an ounce in COMEX September silver.
NYMEX October platinum fell $0.30 to $511 an ounce. Spot platinum was quoted $3 higher at $514/522.
Thinly-traded September palladium futures rose $3 to $322 an ounce. Spot palladium traded at $318/330.