Gold slipped in very light trade early on Tuesday, as technical selling and a lack of fresh economic news failed to stimulate buying interest in the final week of the year. Selling related to the expiration of US January gold options also weighed on bullion despite a rally in crude oil and a weaker dollar. A mixed bag of US consumer confidence and home prices data prompted investors to stay on the sidelines.
Gold is on track for a 9 percent fall for December. Prices earlier in the month plunged below a key technical support they had held for nearly three years, fuelling fears that bullion was close to ending a more than decade-long bull run.
"Technically, a close above the 200-day moving average at $1,628 in spot gold is still needed to reinstate a bull market," said Carlos Perez-Santalla, precious metals broker at PVM futures.
"The gold market will see odd movements this week as many money managers have closed out the year, leaving the market with technical and headline-sensitive traders," he said.
Spot gold fell to a one-week low of $1,591.09 earlier in the session. It was down 0.7 percent at $1,593.10 an ounce by 12:23 pm EST (1723 GMT).
This year to date, gold is up 12 percent - one of the few investment assets that posted sizable gains in a difficult 2011.
US February gold futures dropped $10.90 to $1,595.10. Volume was below 40,000 lots, set to be among the weakest turnover this year but consistent with the year-end trading volume last year.
Some traders sold in-the-money options ahead of the expiry of COMEX January gold options at Tuesday's market close, said George Gero, vice president of RBC Capital Markets.
Spot silver fell 0.6 percent to $28.87 an ounce.
Holdings of the iShares Silver Trust SLV, the world's biggest silver-backed exchange-traded fund, declined nearly 1 percent on the day to 9,605.79 tonnes by December 23, the lowest since mid-July.
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