Gold futures in New York settled softer and below a 16-year high on Monday, as traders cashed in recent gains while the dollar partly recovered above a fresh all-time low against the euro. Gold for December delivery on the New York Mercantile Exchange's COMEX division slipped 90 cents to $433.40 an ounce, after trading between $431.90 and $436.10, the overnight high which was the loftiest for active futures since July 1988.
Futures mainly consolidated on a firmer footing above $430, but analysts expect the market to soon resume its climb toward near-term resistance at around $440.
"In the mid-term, we have this up-trend and the big long position is there," said one trader at a precious metals refiner.
"The higher the price goes the more comfortable these longs get."
Investors turn to gold as a haven in turbulent times, with geopolitical tensions, volatile equity markets and fears of inflation due to high oil prices all propping up the market. In addition, a sharply weaker dollar was making gold cheaper in foreign currencies.
On Monday, the dollar inched up after the head of the European Central Bank said the euro's recent climb against the dollar was "brutal" and unwelcome.
The euro earlier today touched $1.2985 against the dollar. Analysts said they are betting that it is only a matter of time before it hit the psychological $1.30 level. It last traded at $1.2926.
Currency traders believe the dollar will decline as long as the United States continues to run large and growing budget and current account deficits.
Aside from tracking currencies, gold traders were awaiting Wednesday's US Federal Reserve Open Market Committee meeting, expected to give a quarter-percentage point interest rate hike.
Spot gold priced at $432.35/3.10, versus $433.25/4.00 at Friday's New York close and the overnight 16-year high in Asia at $435. Monday's afternoon fix in London was at $431.90.
CFTC Commitments of Traders data on Friday showed the massive fund net long position in COMEX gold futures fell to 111,437 lots as of November 2 from 127,895 lots a week earlier.
It appeared more longs were added late in the week, however, as the gold market rallied, leaving funds "overexposed but still comfortable," said IFR Markets analyst Tim Evans.
Evans pegged support in December gold at $425.50 followed by $418 and then $410.50 with resistance at $435 and $436.50 and then at $440 on the way to $450.
December silver slipped 1.8 cents to $7.487 an ounce, in a $7.58 to $7.42 range.
Spot fetched $7.44/47, off from $7.45/48 previously. The London fix was $7.4450.
NYMEX January platinum lost $2.30 to $849.60 an ounce. Spot platinum was worth $844.50/849.50.
December palladium shed 20 cents to $217.50 an ounce. Spot palladium touched $210.00/216.00.