Gold fell on Tuesday, retreating from an initial rally, as solid gains in US equities and an improving economic outlook weighed on the metal's safe-haven appeal. Palladium and platinum rose on better demand expectations after data showed the US services sector expanded in January, while European business optimism hit an eight-month high.
Bullion rose earlier in the session after data showed Hong Kong's net gold flow to mainland China jumped 47 percent in 2012 to a record high. The report was consistent with latest official-sector data showing renewed gold interest among central banks such as Russia, South Korea and other emerging economies.
"Central banks have been buying gold for months now, and we (gold futures) really haven't moved. To me it's bearish, as I would think that we should be much higher," said COMEX gold options floor trader Jonathan Jossen. Spot gold was down 0.1 percent to $1,671.80 an ounce by 2:42 pm EST (1942 GMT), retreating from a high of nearly $1,685 earlier in the session.
US gold futures for April delivery settled down $2.90 at $1,673.50, with trading volume about 10 percent below its 30-day average, preliminary Reuters data showed. Spot silver edged up 0.2 percent to $31.78. Palladium reversed early losses to rise 1 percent to $762.47, after setting a fresh 17-month high of $766.22. Platinum was up 0.4 percent at $1,700.24 an ounce.
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