Gold slipped below $1,650 an ounce in thin trading on Wednesday as investors kept to the sidelines ahead of a G20 meeting later this week, which is expected to give clues on currency policy. China's week-long Lunar New Year holiday also curbed trade. Spot gold eased 0.2 percent to $1,647.51 an ounce by 1456 GMT. US gold futures for April delivery eased 0.1 percent to $1,647.30 an ounce.
Gold suffered technical selling pressure this week, with prices sliding to their lowest in more than a month at $1,638.82 after breaching a succession of support levels. But analysts 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. G20 finance ministers and central bank governors are set to meet in Moscow on Friday, with negotiations around competitive currency policies likely to dominate.
The Group of Seven rich nations tried this week to cool growing tension over exchange rates sparked by weakness in the Japanese yen, but markets found the effort lacking in clarity. "Support from both the investor and spec (speculative) community is needed in order for gold to stage a convincing recovery from here," UBS said in a note. "But the lack of urgent fundamental motivation makes it difficult for gold market participants to muster enough conviction."
Gold also lacked support as China's markets remained closed for the Lunar New Year holiday. "Given China is on holiday this week ... physical gold demand on the Shanghai (Gold) Exchange is expected to slow down after a year-on-year jump of 10 percent in January and February," Sharps Pixley said in a note.
Platinum group metals (PGMs) continued to outperform gold and silver, with palladium hitting repeated multi-month highs on concerns over supply and signs the global economy is recovering. Spot palladium rose to $775 an ounce, its strongest since September 5, 2011, before settling at $769, flat on the day. Platinum gained 0.6 percent to $1,723.99, 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 1.8 percent fall in gold. Technical analysts, however, expect some short-term correction for palladium after strong gains, as investors consolidate their positions. "It is also possible that a deeper corrective move lower towards the 55-day moving average at $710.64 could be seen in the days and weeks to come," Commerzbank said. Silver was down 0.6 percent at $30.92 an ounce.
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