Gold turned lower on Monday, as the dollar pared losses, and U.S. shares and other commodity markets staged a comeback while the white precious metals fell on concerns about the Chinese economy.

World stock markets initially plunged after a near-9 percent dive in China shares, attracting safe haven buying to gold as crude oil futures fell sharply to 6-1/2-year lows and copper to a six-year low.

Spot gold was down 0.7 percent at $1,152.45 an ounce, after rising to $1,167.50 an ounce. U.S. December gold futures settled down 0.5 percent at $1,153.60 an ounce.

Platinum dropped as much as 4.5 percent, palladium hit a three-year low at $563.72 an ounce and silver fell 4.8 percent to the lowest since Aug. 6 at $14.57 a ounce.

The 19-commodity Thomson Reuters CoreCommodity Index fell as much as 3.2 percent to the lowest level since December 2002 after slumping Chinese equities fueled worries of a hard landing in the world’s biggest consumer of raw materials.

The U.S. dollar fell 2.5 percent to its lowest since the end of January before paring losses.

Gold has now rebounded 7 percent from a 5-1/2-year low of $1,077 reached in late July, benefiting from uncertainty posed by China’s surprise devaluation of its yuan currency.

Worries about global deflation, however, would not bode well for gold, typically seen as a hedge against inflation.

Source: Bloomberg