Comex gold futures backtracked on Tuesday after on Monday's settlement at a near 16-year peak, as the dollar recovered from an eight-month low against the euro on better-than-expected US consumer confidence data.
"It seemed like certain positions were taken today ahead of the US consumer confidence data and that wasn't as weak as traders had expected and we saw some real short covering as a result.
That moved the euro lower and took gold with it," said Andy Montana, director at ScotiaMocatta in Toronto. Gold for December delivery at the New York Mercantile Exchange's Comex division fell $2.30 to settle at $427.60 an ounce, after ranging from $430.60 to $425.70.
On Monday, gold had at its highest active-month settlement at $429.90 since December 2, 1988, when it ended at $431.70.
December futures need to vault resistance at $433 to make a break higher, analysts and traders said, with next resistance pegged at $436.50, the peak set by the active contract back in April, while key support was viewed at $423.
Montana said that aside from moves in the dollar and the price of oil, the market looked for direction from US GDP figures due on Friday and, most importantly, the US presidential election on November 2.
Investors often turn to gold as a safeguard when other markets are in turmoil. A lower dollar makes the precious metal more affordable for overseas buyers. "We are balanced at a bit of a knife edge here.
We have Comex options expiration today and OTC options tomorrow, but I doubt that they're going to do very much because people are looking to what's going to happen next week," Montana said.
The dollar climbed to $1.2756 per euro in the afternoon from eight-month low at $1.2841 as investors bought it after a downbeat assessment on European growth and a less-dire-than-expected reading on US consumer confidence for October at 92.8.
US crude oil rose 63 cents to $55.17 a barrel in afternoon trade. Spot gold slid to $426.05/6.80 an ounce, from the prior New York close at $428.25/9.00. On Tuesday's afternoon London fix was $427.50.
December silver slipped 4.0 cents to $7.34 an ounce, within a range of $7.39 to $7.25. Spot silver was worth $7.29/32, off from $7.33/36 previously. It fixed at $7.31.
"(The market) should continue to closely monitor the moves made by gold in response to the dollar and oil, while support is expected between $7.15-25 with resistance at $7.45-50," said James Moore of the thebulliondesk.com.
January platinum fell $8.10 to $844.90 an ounce. Spot platinum was stable at $841.00/846.00. December palladium slipped $3.85 to $215.10 an ounce.
Spot palladium hit $212.00/218.00.