Gold eased on Monday as the dollar rose on promising US existing home sales data, but renewed worries about financial stability in some eurozone countries kept the metal from falling further. Bullion came under pressure as the dollar rebounded against the euro on renewed concerns about the financial stability of peripheral eurozone countries. Wall Street stock indexes also fell more than 1 percent.
"Gold is holding up comparatively well considering the rebound in the US dollar. Friday's highs were tested, and the price has come in for light profit-taking," said David Thurtell, an analyst at Citigroup. A report showing pending sales of previously owned US homes rose to a four-month high in August also boosted the dollar and took some steam out of bullion. The usual inverse relationship between gold and dollar has showed signs of strengthening of late. The 25-day simple correlation between the metal and the US currency has increased to a negative 1.
Spot gold eased 0.2 percent at $1,313.60 an ounce at 12:24 pm EDT (1624 GMT). It hit a record at $1,320.80 an ounce on Friday. US gold futures for December delivery dropped $3.20 to $1,314.60. A Reuters poll of analysts last week found most felt gold's run to record highs is likely to continue for the rest of 2010, with two out of three seeing prices above $1,350 by year-end.
Silver was trading up 0.2 percent at $22 an ounce. In a smaller and less liquid market, silver has outpaced the rise in gold prices so far this year, with the gold-silver ratio - the number of silver ounces needed to buy an ounce of gold - dipping below 60 for the first time in nearly a year last week. Platinum slipped 0.5 percent at $1,667.50 an ounce, and palladium was trading down 1.5 percent at $560.78.
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