Gold retreated from four-week highs on Wednesday as investors cashed in gains, with a rally sparked by weaker-than-expected US non-farm payrolls data running out of steam. The metal rose nearly 2 percent on Tuesday while the dollar index hit eight-month lows and stock markets rallied, after weak US jobs data cemented expectations for the Federal Reserve to keep its stimulus measures in place until next year. However, those moves went into reverse on Wednesday, with European shares snapping a nine-day winning streak and US stocks opening lower.
"Yesterday's bounce fizzled out very quickly, which is another sign that rallies are really seen as selling opportunities... and people don't expect much higher prices," ABN Amro analyst Georgette Boele said.-- Largest gold ETF reports biggest inflow since August 23 "People sell because they are not too comfortable about the outlook, they know that sooner or later the Fed will taper, the US economy will get better and the dollar will probably go up, it's just a delay."
Spot gold was down 0.6 percent at $1,332.46 an ounce at 1359 GMT, while US gold futures for December delivery were down $9.70 an ounce at $1,332.70. Spot prices hit their highest since September 20 on Tuesday at $1,344.46 an ounce. Commerzbank's technical analysts - who study past price patterns to determine the next likely direction of trade - say gold's rally on Tuesday had neutralised its bearish view on the metal, although it remains vulnerable to further losses.
"We are technically clearly at a key juncture for the development of the next medium-term trend, which is why we have once again neutralised our forecast," they said in a report. "As long as the 1,330.17/1,349.31 resistance area - July, late September and early October highs and the 55-day moving average - caps on a daily chart closing basis, we will continue to favour the downside."
The world's largest gold-backed exchange-traded fund, New York's SPDR Gold Shares, reported an inflow of more than 6 tonnes on Tuesday, its biggest one-day inflow in two months. On Monday it saw an outflow of more than 10 tonnes. Gold premiums in India hit $120 an ounce to London prices on Tuesday as the domestic market failed to get enough supply to meet strong festive demand. In China, Shanghai spot prices were trading at a premium of $7 an ounce.
Among other precious metals, silver was down 0.2 percent at $22.56 an ounce, having also touched a one-month high on Tuesday at $22.80 an ounce. The gold/silver ratio, which measures the number of silver ounces needed to buy an ounce of gold, fell to its lowest since mid-September on Wednesday at 59.01 as silver outperformed. Spot platinum was down 0.6 percent at $1,434.99 an ounce, while spot palladium was down 0.7 percent at $745.97 an ounce. It hit a near two-month high of $752.50 on Tuesday.
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