Gold futures in New York slid off a 3-1/2 week high to end lower on Wednesday, as profit-taking ended the prior day's dramatic precious metals rally, dealers said. Moves in energy and currencies played a partial role in gold's direction as the market continued to consolidate within a recent range, even after on Tuesday's metals buying spree following the US Labour Day holiday.
"Some traders chose to take part of the money they amassed on Tuesday off the table," said Jon Nadler, analyst with Ketch Bullion Dealers. "Lower crude oil values and a bouncy US dollar dented bullion prices but did so only marginally," he said in a note.
Meanwhile, silver ended higher but hovered below on Tuesday's three-month peak, with resistance at $13.50 an ounce blocking the way for now. At the Comex division of the New York Mercantile Exchange, December gold was down $5.10 or 0.8 percent, at $641.80 an ounce, after moving from $641 to $648.50 the same near one-month peak reached a day.
Volumes stayed thin as players who were returning from late summer holidays kept an eye on other markets and adjusted holdings at the start of September, brokers said. Estimated Comex gold turnover was a light 37,000 lots, against on Tuesday's official count of 50,134 lots.
The dollar rose broadly after US data on labour costs and growth in the service sector suggested greater strength in the economy than some investors had thought. Bullion usually falls when the US currency rises because the metal is viewed as a key dollar alternative.
Nymex oil futures slipped to almost $68 a barrel as supply worries eased after the end of the US summer driving season. Gold frequently tracks oil as a component of commodity indexes. Additionally, some traders also use the metal to hedge against inflation. Chartists traced $648.50 and then $650 as major resistance points for benchmark Comex December gold, with support seen at $615.
Spot gold eased to $633.60/634.60 an ounce, after spiking above $640, from $638.20/9.20 at its last New York close. Bullion dealers fixed on Wednesday's afternoon spot reference rate at $635.40 in London.
James Moore, an analyst with TheBullionDesk in London, said that, despite its gyrations this week, spot gold stayed in its broad $605 to $655 trading range of the last several months. However, investor interest and supportive fundamental factors were keeping gold on course to regain the $700 level before year-end, he added in a report.
Investment bank UBS hoisted its short-term bullion price forecast to $650 in one month from $630 previously, while its forecast for three months out rose $10 to $690. Gold has risen 16 percent in the same period. Comex December silver gained 6.0 cents to $13.20 an ounce, in a range of $13.05 to $13.35. On Tuesday's high of $13.37 was its best price since May 30.
Analysts have said that silver is deriving support from positive near-term technical factors and steady demand for a silver exchange-traded fund that launched in April on the American Stock Exchange.
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