Gold gave up most of its gains on Tuesday after soaring as much as one percent in the previous session, with the market pulling back as it failed to break a key resistance level. Spot gold was down 0.5 percent at $1,343.76 an ounce as of 0650 GMT. Bullion touched a peak of $1,357.60 an ounce on Monday, less than $1 below a two-year high hit on June 24.
US gold was up 0.6 percent at $1,346.30. Technical charts show spot gold may retrace towards support at $1,323 per ounce, as it failed to break resistance at $1,351, said Wang Tao, a Reuters market analyst for commodities and energy technicals. Silver fell more than 3 percent at one point to $19.548, before paring losses to trade 1.6-percent lower at $19.98 an ounce. It had jumped as much as 7 percent, breaking above $21 an ounce for the first time in two years, in the previous session.
"The precious metals had very strong upside momentum in the past few sessions after the Brexit referendum ... Some kind of pullback in the current market conditions seems justified," said Mark To, head of research at Hong Kong's Wing Fung Financial Group. "It could be a very short-term correction." HSBC on Tuesday raised its 2016, 2017 average gold price forecasts to $1,275 per ounce and $1,310 an ounce respectively. "Investment demand is driving prices and reflects the uncertain macro backdrop, dovish outlook for US interest rates, and appeal of gold in a negative rate environment," HSBC analyst James Steel said in a note. "But gold could weaken again if the global risk thermometer recedes while the US dollar remains strong and the euro weak."
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