Gold futures in New York slid to three-day lows early Tuesday, hit by liquidation in thin volume ahead of US Federal Reserve interest rate talks later in the week and a half-session Friday before the US July Fourth holiday. Silver futures, meanwhile, sank to a one-month low on technical fund selling.
By 10:31 am EDT (1531 GMT), August delivery gold on the New York Mercantile Exchange fell $3.70 to $438 an ounce, dealing from $441.60 to $437.30.
Gold futures hovered well below Friday's three-month peak at $445.40 as market participants lightened up on holdings after weakness in gold trading overnight in Asia. "We had some decent (bank) selling on the opening but fund buying came in to support the market," said a COMEX floor trader, referring to a contrarian fund that has been doing options-related buying in gold in recent weeks.
The Fed announces its move on interest rates on Thursday. A Reuters poll found that economists expect it to raise its key lending rates by a quarter point to 3.25 percent. That compares with euro zone rates at a historically low 2 percent. On Friday, US metals futures will trade a half-day ahead of Monday's US Independence Day holiday.
Fund money flowing into gold has propped up prices and gold should keep zigzagging higher for now, although it may not be a smooth ride, said IFR Markets analyst Tim Evans.
Gold again showed a tighter correlation with the euro when the currency retreated to $1.2081 against the dollar, from $1.2161 near gold's close Monday.
Spot gold moved down to $435.70/6.15 from $439.75/440.50 at Monday's New York close. Tuesday's afternoon fix in London was at $437.00. July silver futures shed 11.2 cents to $7.13 an ounce, traded $7.24 to $7.12. July-into-September contract rollover was proceeding modestly before July first notice day on Thursday. September fell 12.0 cents to $7.17. Spot silver fetched $7.10/13, off from $7.21/24 in New York on Monday. The London fix was at $7.215.
July platinum fell $9.10 to $883.20 an ounce. October is the next active contract. Spot platinum reached $880/884.
September palladium slipped $2.75 to $184.75 an ounce. Spot hit $182/186.
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