COMEX gold fell below the $400-an-ounce chart support point early Tuesday as traders lightened risk insurance after a long weekend and said the buying before last week's Republican Convention now looked overdone.
The euro was seesawing in a narrow range, providing no direction, so players used their first day back from the Labour Day holiday Monday to sell out of long positions accumulated in gold's run to four-month highs in late August.
At 10:09 am EDT, December gold was down $2.40 at $400.10 an ounce, trading from $404.50 to $398.80. The shakeout started Friday with a $5.50 drop after August non-farm payrolls data was less discouraging than the market had braced for.
"People were expecting precious metals to come off the boil after (there were) no problems last week, with the convention finished," said the manager of a bullion trading firm. "Gold got a little ahead of itself."
The US unemployment rate fell to 5.4 percent in August, the lowest since October 2001, and non-farm payrolls rose 144,000, near the predicted 150,000 increase. After months of disappointing data, traders saw less standing in the way of another dollar-supportive Federal Reserve interest rate hike this month.
Spot gold was trading at $397.85/8.50, down from Friday's late quote in New York of $400.15/90. London's Tuesday morning fix was $401.80.
The bullion trader said he expected spot gold to weaken back to the $380s "comfort zone," where the precious metal was trading before the rally which took spot to $414.05 and December gold to $416.80 on August 20. In April gold reached 15-year highs above $430 an ounce.
December silver, was down 26 cents at $6.33 an ounce. It traded from $6.625 to $6.32, its lowest price since July 29.
The bullion trader said poor supply/demand fundamentals were catching up with volatile silver, which has fewer players than gold and usually experiences larger price swings.
Spot silver fell to $6.26/29 from $6.54/57 late Friday. The fix was at $6.515. October platinum went down $15.40 to $844.00 an ounce. Spot fetched $842.00/847.00. December palladium eased $4.80 to $207.50 an ounce. Spot palladium was quoted at $204.00/209.00.