Gold prices were lower in Europe on Tuesday in choppy, currency-led trade, with the market abandoning a struggle to break higher when the dollar stood firm. In other precious metals, platinum fell sharply as Asian selling overnight was compounded after a report from refiner Johnson Matthey, which continued to see the global market moving towards surplus this year.
Spot gold was quoted at $424.05/$424.80 per troy ounce by 1555 GMT, from $425.25/426.00 late in New York on Monday.
Dealers said bullion religiously followed currency moves - spiking briefly above $426 as the euro surged over $1.30, then faltering as the dollar trimmed losses after a report on US asset flows showed foreign investments were sufficient to finance the nation's current account deficit.
A stronger US currency makes dollar-priced gold less attractive for non-US investors. The euro was last at $1.2973.
"I think the upside is a struggle between $425 and the 100 day moving average (around $428.40). (Federal Reserve Chairman Alan) Greenspan is talking tomorrow but I think ...gold may work its way back down into the teens again," Simon Weeks, director bullion at ScotiaMocatta, said.
Net inflows of capital into US assets in December slowed to $61.3 billion, from an upwardly revised $89.3 billion in November. Analysts had forecast net inflows of about $60 billion.
On a year over year basis, net inflows for 2004 rose about 20 percent to $821.8 billion from $683.6 billion in 2003.
Greenspan begins twice-yearly testimony to congressional committees on Wednesday, with markets looking to see if he repeats upbeat comments made this month about the outlook for the current account.
Gold market analysts have said they expect prices to surpass 2004's 16-1/2 year peak of $456.75 this year, although further falls could be likely first.
"Dips back towards $411-15 can't be ruled out, however with the heavy consolidation already seen this year and still wide fundamentals I think we could see gold start to work back towards $440," James Moore of TheBullionDesk.com said in a daily report.
Spot platinum was last at $850.00/854.00 from $874.50/879.50 in New York after fund selling in Asia prior to a report from refiner Johnson Matthey, which saw prices easing this year as the market moved towards a surplus.
Silver eased in line with gold to $7.22/7.25 from $7.31/7.34 in New York, while palladium dipped to $180.00/184.00 from $183.00/188.00.
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