US gold futures settled slightly lower on Wednesday in choppy trading, mirroring the euro's move down against the dollar, while other precious metals prices were a mixed bag, dealers said.
Palladium sprinted up more than 4 percent to 15-month high, as small speculators and investment funds switched money into the technically strong market and ignored gold.
Platinum eased in New York but silver stayed firm near a 10-month peak. December delivery palladium on the New York Mercantile Exchange surged $9.15 to end at $230.70 an ounce, the highest close for futures on a spot continuation basis since July 2004.
"The chart from a technical standpoint looks very strong here above $225 and you had some buying there," said a trader at a precious metals refiner.
Recent price strength had built up interest in the market and with Wednesday's move to new mullet-month highs, stop-loss buying by short-term speculators was triggered, he said.
The platinum group metal, which is used mainly in automotive catalytic converters to clean exhaust fumes and in jewellery, is the most illiquid of the exchange-traded precious metals and can move sharply in light volumes.
"It's not about physical off-take or other fundamental news today," the trader added. "But, if it continues to rally at these levels we haven't been up here for quite some time I would expect some Russian producer selling soon."
Chart resistance lurks up at $240, traders said, with support seen down around $210. The all-time high in futures was $1,090, set in January 2001.
Spot palladium last traded at $223/226 an ounce, against on Tuesday's New York close at $213/217. In sister-metal platinum, Nymex January futures inched down 60 cents to end at $945 an ounce, although the market continues to hold near recent nine-month highs.
Spot platinum fetched $940/944, up from $936/939 previously and off from a recent 25-year high of $943. December gold on the Nymex's Comex division retreated to $473 an ounce, down $1.70, after dealing from an eight-day high of $476.10 to a session low of $472.70.
The yellow metal back-pedalled as the greenbacks gained in the afternoon as rising Treasuries yields were seen attracting more foreign investors to dollar-denominated deposits.
Dollar-denominated gold often falls when the US currency rises, as bullion becomes costlier for holders of foreign currencies. Gold had been higher on fund and spec buying as more investors were paying attention to hard assets like commodities after gold recently hit an 18-year high and crude oil commanded $70 a barrel for the first time ever.
Analysts said gold could revisit its recent highs of $480.25, basis spot, and $483.10 in futures, in the coming days. Some have said that a test of the psychological $500 level is possible, if the rally gains enough traction.
UBS analyst John Reader said gold looked less likely to be hit with a heavy blow of fund long liquidation, as concerns about inflation and the dollar persist.
"Funds remain very long of gold, and we still expect a correction at some point. But, with the dollar off its highs and possibly set to weaken further, and inflation expectations possibly set to go higher, there is some risk that this sell-off will be delayed," he said in a note.
Final estimated Comex volume was 50,000 lots, compared with Tuesday's busier tally of 65,789 lots. Open interest in the New York gold market rose 3,572 to 339,388 contracts as of October 25.
Spot gold fell to $470.30/471.00 an ounce from the prior New York closing quote at $472.20/3.00. On Wednesday's afternoon fix in London by bullion dealers was at $473.20. December silver gained 3.8 cents to $7.863 an ounce, dealing from $7.82 to $7.925. A break above $7.955 would take futures to their loftiest level since last December.
Spot silver reached $7.77/80 versus on Tuesday's close at $7.78/81. It fixed higher on the day at $7.83.
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