NEW YORK, Sept 27 (Reuters) - COMEX gold failed to hold gains on Friday, as buyers became scarce in lackluster trade even as Wall Street erased most of its recovery in recent days.
The Dow Jones industrial stock average was down 2.97 percent in afternoon trade and the Nasdaq was off 0.85 percent, heading back toward the respective four and six year lows set early this week, while investors moved into safe havens like gold.
December gold fell 60 cents to settle at $321.10 an ounce, touching $320.10 after the failure of a morning rally to $323.10.
Estimated volume was tepid at 24,000 contracts, compared to Thursday's official 44,027.
"There was no follow through at all. It should have gone up to $324 or something like that, looking at the past week. But the correlation left us today," a trader at a precious metals refinery said of the usual inverse relationship between gold prices and equities.
Likewise, gold ignored slight weakness in the dollar, which has been a dependable supportive factor, making bullion look more affordable to overseas investors in their own currencies.
The contract also fell Wednesday and Thursday, after nearing June's 2-1/2 year peaks over $330 on Tuesday as financial markets fretted about corporate earnings, economic growth and the prospects of a U.S.-led war to disarm Iraq.
The bulled up COMEX is almost as overbought as it was during the rally to the June highs.
The CFTC Commitments of Traders report released after the close Friday showed the net noncommercial long position on the COMEX ballooned again to 42,181 contracts from 25,186 in the week to Tuesday.
Spot gold slipped to $319.70/0.20, from $320.40/90 late Thursday. Bullion dealers fixed London's afternoon spot reference price at $320.05.
December silver slipped 2.0 cents to $4.505 an ounce, trading from $4.545 to a 23-day low at $4.49.
The net fund long in silver rose to 22,206 contracts from 14,319 last week.
Spot silver was last at $4.48/50, off $4.50/52 at Thursday's close. It fixed at $4.51 an ounce.
NYMEX October platinum rose 60 cents to $559 an ounce. Spot platinum was last at $558/563.
December palladium fell $4.30 to $315.10. Spot palladium was indicated at $311.10/323.10.