Gold recoiled from last week's 2005 high above $445 an ounce in Europe on Monday, coming under pressure as the dollar fought back, traders said. The metal had a strong chance of revisiting prices last seen in June 1988, with currencies the key driving force, but it might need to consolidate before attacking that peak, they added. By 1512 GMT spot gold had softened to $441.50/442.25 from New York's late quote on Friday of $445.50/446.20.
Gold put in a strong performance last Friday, outperforming the euro and notching up a fresh high for the year at $446.70.
Barclays Capital said in a daily report this was a signal the market was looking to test higher still in the short term, with $450 looming as the target. But some dealers said bullion was looking tired in the mid- to high-$440s, which was making it vulnerable to a sell-off.
"The market wants to go up more...but why hasn't it done it?" Peter Hillyard, head of Europe metal sales at ANZ investment bank, said.
"I am nervous, there is a distinct lack of activity and on balance I think this market is vulnerable to a move down in a major way."
He believed the market had a greater chance of falling back down to re-test support at $428 than regaining $450.
The dollar jumped on Monday as investors bought back the greenback following its slide after weak US trade numbers on Friday. The euro was at $1.3381/1.3383 by 1520 GMT.
Financial markets would now be scanning US capital flows data on Tuesday and current account data on Wednesday to gauge investor sentiment towards the dollar. A weaker dollar makes gold relatively cheaper for overseas investors.
Technical analysts said gold's performance was looking positive, with trading signals continuing to point to gains.
Gold would have to remain above $437/438 for that to hold true and push above $447.25 to open the way to $456.75. Other precious metals were equally subdued.
Silver fell to $7.38/7.41 from $7.51/7.54. Platinum edged up to $870.00/874.00, while palladium fell to $196.50/199.00 versus New York's previous $200.50/205.50.
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