Comex gold closed lower on Monday, consolidating last week's rise to 10-week highs, amid concerns that bullion bulls overcommitted themselves betting that prices would return to January's 15-year peak.
A whopping 40,000-contract increase in the fund long position reported in late on Friday's CFTC Commitments of Traders report tempered the enthusiasm to buy gold, dealers said.
April gold ended down $5.10 or 1.21 percent at $417.10 an ounce after rising 1.3-percent on Friday and hitting $424 to mark its loftiest level since January 14.
On Monday's range was $422.90 to $416.60. Last-minute position adjustments before the expiration of over-the-counter options in London pulled bullion down toward the popular $420 strike price in the morning.
Traders said gold shrugged off a rise in the euro. But the focus was still on the dollar's recent woes, Middle East tensions and the after-effects of recent deadly bombings in Spain and Iraq and a bomb scare in France, all of which fuelled safe-haven buying and lifted April gold from $388.20 on April 3 toward the 15-year high of $432.30.
"It had a big move. I personally believe you are not going to see a big shakeout, just because the reasons they got in were fundamental, and I don't think anything has changed," said a bullion trader.
"Post-Spain, the world changed again." The net speculative long position on Comex rose to 102,511 gold contracts from 62,479 in the week to last on Tuesday.
This was approaching the overbought extreme of 115,985 from January and the record of 122,847 from September 2003. "When it gets very large, it is an impediment on the upside and greases the skids on the downside," said James Pogoda, a vice president of precious metals at Mitsubishi International Corp.
"The upside should be a little bit tough and I would anticipate some of these guys trying to take some profits at some point."
Spot gold was quoted at $416.50/7.25, down from the close on Friday at $422.25/2.75.
London's afternoon fix was $421.25. May silver sank 9.2 cents to end at $7.625 an ounce, consolidating on Friday's rally to a 16-year high of $7.81.
It traded from $7.755 to $7.605. Spot silver fetched $7.59/62 versus $7.70/72 late on Friday. It fixed at $7.67.
Nymex April platinum closed down $23.20 at $888.90 an ounce.
Spot ended at $887.00/892.00.
June palladium slipped $2.30 to finish at $288.90 an ounce. Spot was last indicated at $284.00/289.00.