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Palladium hits lowest since 2018

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Platinum down more than 3%

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Stock markets tumble as investors flee risk

(Writes through and updates prices as of 0856 GMT)

By Ashitha Shivaprasad

Aug 5 (Reuters) - Gold prices eased in volatile trading

on Monday as investors liquidated positions in tandem with a

broader equities sell-off, though analysts said bullion's

safe-haven appeal remains strong as U.S. recession fears mount.

Spot gold was down 0.8% at $2,425.04 an ounce by 0856

GMT. U.S. gold futures lost 0.1% to $2,465.90.

"There's some truth in the old chestnut that all

correlations go to one in a crash, and with traders needing to

liquidate winning positions to cover margin calls on other

assets, gold's volatility signals the level of panic hitting

equity markets," said Adrian Ash, director of research at

Bullionvault.

Stock markets tumbled, with Japanese shares exceeding their

1987 Black Monday loss at one point, as fears of a U.S.

recession prompted investors to offload risk assets.

Data on Friday showed that the U.S. unemployment rate jumped

to 4.3% in July, raising the likelihood of a Federal Reserve cut

to interest rates in September, with markets now expecting the

central bank to cut by as much as 50 basis points.

"There is likely resistance at the old high of $2,484, but

geopolitical tensions and concerns about whether the Fed has

fallen behind the curve are all supportive for gold," said

StoneX analyst Rhona O'Connell.

Spot silver was down 2.5% at $27.83 an ounce.

Platinum fell 3.4% to $925.65 and palladium

lost 3% to $862.83 after hitting its lowest since August 2018.

The two metals are used by automakers in engine exhausts to

reduce emissions.

Both metals are under pressure from the long-term risk

presented by the transition to net zero emissions, but there are

massive short positions that will eventually be unwound, so

there is a good chance that both of them will reach around

$1,000, O'Connell added.