Gold futures in New York slipped off a near four-week peak early Tuesday as dealers sold on overbought signals in the wake of Monday's short-covering rally by speculators. August delivery gold on the COMEX division of the New York Mercantile Exchange fell $2 to $426.40 an ounce by 9:56 am EDT (1356 GMT), trading from $429.60 to $426.20.
"The inability of gold and silver to head higher early may be typified as an up-on-Monday, down-on-Tuesday scenario. We're in the process of a little consolidation," said James Quinn, commodities commentator at AG Edwards & Sons.
The morning's fall partially erased Monday's $2.60 gain to its highest close since May 11 at $428.40.
Quinn said that fears of slowing jewellery demand in Asia due to recently higher metal prices also weighed on the complex. "We needed a correction and we are probably going to hover around the $425-$426 level" in gold, he added.
Analysts put resistance in COMEX August gold at $427 to $432 and then at $440 with support at $416.80 and $415.80.
Bullion was supported by a steady euro that made dollar-denominated gold attractive for non-US investors, traders in Europe said. Spot earlier hit $427.50 - its loftiest since May 11 - before easing back.
Spot gold retreated to $424.20/4.90 an ounce from $426.00/6.70 at Monday's close. Tuesday's London afternoon fix was $424.10.
Some dealers felt a move 350 euros per ounce of gold could well spark a broader rally in the market, after the metal recently seemed to be decoupling from the currency. Gold in euros was last at 345.56/346.27.
July silver fell 8.0 cents to $7.46 an ounce, dealing from $7.565 to $7.42. Futures rallied to a 12-week high at $7.63 last Thursday on speculative buying amid expectations of a silver exchange-traded fund coming to market soon. Spot silver dipped to $7.42/45 from $7.50/53 previously. It fixed at $7.525.
Platinum and palladium slipped back after a fund-led boost on Monday, as prices ran into trade selling at above $880 an ounce and $190-193 an ounce, respectively.
July platinum fell $5.20 from three-week highs to stand at $876 an ounce. Spot traded at $874/878.
September palladium declined $3.15 to $188.50 an ounce. Spot fetched $186/190.
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