Profit taking pressured gold in early New York trading Tuesday after prices topped $500 an ounce overnight for the first time in 18-years, rewarding weeks of fervent buying by investors and short-term speculators.
Platinum prices were struggling near a 25-year high, but funds also cashed in some of the bullish bets booked recently.
At the COMEX division of the New York Mercantile Exchange, December gold futures were down $2.50 at $495.80. They retreated from $5.023, the highest futures price since late 1987, to a low of $494.30.
"I don't know what to expect for year-end," said Bruce Dunn, a trader at bullion trading firm Auramet. "Either they are going to try to push it one more time or you could see some massive liquidation. The funds are very long."
Spot gold was quoted at $496.80/7.20, down from $498.20/9.00 at Monday's New York close. The afternoon fix in London was $496.00.
Growing demand, supply constraints and plans by some central banks to buy more gold were expected to support prices, dealers said.
Investors all but ignored bearish factors like easing oil prices, higher purchasing costs from a recovering dollar and declining physical demand at higher prices.
Gold has risen more than 14 percent this year. Analysts said investment funds were increasing their exposure in commodities to diversify and enhance portfolio returns. Gold is also considered a hedge against rising inflation and a weak dollar.
December silver was off 3.3 cents at $8.32 an ounce, trading from $8.365 to $8.25. Spot silver was near 1-1/2 year highs, trading at $8.31/33, off from $8.35/37 an ounce. The fix was at $8.29.
NYMEX January platinum was off $1.10 at $1,000 an ounce, still near Monday's peak at $1,011, the highest price since March 1980.
Spot platinum was last quoted at $992/995.
In platinum's sister metal, palladium, the December contract was up 30 cents at $263 an ounce, remaining close to the 18-month high hit last week at $270.10. Spot palladium fetched $263/267.
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