Gold fell below $1,650 an ounce on Wednesday after data showed disappointingly small growth in US retail sales in January, while some investors stayed at the sidelines ahead of a G20 meeting later this week, which is expected to set the tone for the gold trade. China's week-long Lunar New Year holiday also curbed interest in the physical market, traders said.
Analysts said that some investors turned their attention to Wall Street and away from gold and other commodities after the benchmark US equities index S&P 500 rose to its highest intraday level since November 2007. "More money is piling into the equities and real estate as the economy is getting better. It doesn't bode well for gold which is not rising with the stimulus programs in China and Japan," said Bruce Dunn, vice president of trading at precious metals dealer Auramet.
Spot gold fell 0.5 percent to $1,641.74 an ounce by 3:03 pm EST (2003 GMT). US gold futures for April delivery settled down $4.50 at $1,645.10 an ounce, with trading volume at 30 percent below its 30-day average, preliminary Reuters data showed. Gold suffered technical selling pressure this week, with prices sliding to Tuesday's one-month low at $1,638.82.
Silver dropped 1 percent to $30.76 an ounce. Analysts said they expect prices will edge higher in coming sessions on investor short-covering before the Group of 20 summit. "Although people are not expecting anything dramatic to be said at the G20 meeting, there is still some uncertainty, which may see short-term investors cover their short positions in coming sessions," Societe Generale analyst Robin Bahr said.
Platinum group metals (PGMs) continued to outperform gold and silver, with palladium briefly hitting a 17-month high on supply worries and demand hopes before retreating. Spot palladium fell 0.6 percent to $764.22 an ounce. Earlier in the session, it hit $775, its strongest since September 5, 2011. Platinum edged up 0.3 percent to $1,718, still within sight of a 17-month peak struck last week. With a 12 percent gain, platinum is the best performer this year so far, compared with a 10 percent increase for palladium and a nearly 2 percent fall in gold.
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