US gold futures back-pedalled on Thursday to end down from a previous 18-year high, pressured by a second day of profit-taking by fund-type accounts in holiday-thinned trading, market sources said.
Gold hit a new peak of $483.10 an ounce on Wednesday on more of the investment buying that has been sparked by inflation fears and good bullion demand.
That was the loftiest price for gold futures since January 1988. "It looks like the last two days has just been profit-taking from the funds," said one trader at a bank.
Most active December delivery gold sank $2.80 or 0.6 percent to $473.80 an ounce on the New York Mercantile Exchange's Comex division, trading from $477 to a one-week low of $470.30.
Volume was light due to the Jewish holy day of Yom Kippur, which sidelined some players. Estimated Comex volume was a subdued 44,000 lots, versus on Wednesday's 76,750-lot tally.
Some players wondered whether trouble at Reface Inc, the commodities and futures brokerage whose shares have fallen more than 60 percent this week, had any knock-on effect on markets, such as the metals, in which the firm conducts business.
"Reface is a big player for funds and I think there might be some connection between this and the liquidation we've seen," said a broker at a futures commission merchant in New York.
"I think a lot of people are trying to get liquid." Refocus former chief executive was charged this week with securities fraud over hundreds of millions of dollars in transactions owed to it by an entity he controlled.
Reface said on Thursday liquidity at one of its units a fixed income, equities and foreign exchange brokerage is no longer sufficient to continue operations.
Open interest fell in Comex gold after speculative selling pushed down futures on Wednesday, and it could decline anew on more liquidation, traders said. Open interest fell 3,907 lots to 366,937 as of October 12. Spot gold last fetched $470.90/471.70 an ounce in New York, below on Wednesday's 18-year high of $480.25 and off from the last close at $472.25/3.00.
On Thursday's afternoon London fix by bullion dealers reached $469.50.
Some trading sources said that, despite gold's price consolidation this week, its rally still seems intact and it may soon challenge the psychological $500 mark.
But others said investors are starting to worry that the commodities bull market could be near a peak. European equities notably energy and mining stocks were down on Thursday on fears that recent commodity price gains might soon falter.
Dealers were looking to Friday's data on US September consumer prices, which economists predict will show a rise of 0.9 percent, for possible direction.
Meanwhile, the US trade gap flared 1.8 percent in August to its third-highest level on record, pushed by new highs in oil prices and imports of textiles and other goods from China.
The deficit hit $59.0 billion, off the median $59.5 billion that was forecast by economists. Record imports of $167.2 billion outpaced record exports of $108.2 billion.
Comex December silver tumbled 10.3 cents to end at $7.735 an ounce, in a range of $7.83-7.695. Spot was quoted at $7.67/70 an ounce from $7.74/76 previously.
The fix hit $7.73. Nymex January platinum fell $11.10 or 1.2 percent to $934.40 an ounce, after futures on Wednesday hit a 20-month high at $951.
Spot last traded at $928/932. December palladium shed $3.45 to close at $211.95 an ounce. Spot was worth $207/211.
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