Gold prices gave back ground in late afternoon trading in Europe, buckling under a firmer dollar after comments by US Federal Reserve chief Alan Greenspan, traders said. Greenspan, in his semi-annual testimony to Congress, said the US growth outlook was solid and the Fed should keep raising interest rates.
"It (gold) was moving nicely higher, bit I think the dollar has taken the steam out of it now," a trader said.
Spot gold stood at $421.40/422.10 an ounce by 1452 GMT from $419.50/420.20 late in New York on Tuesday. Earlier it touched a high of $422.90 on light fund buying.
Monetary tightening would tend to boost demand for US dollar deposits, which may dent the allure of dollar-priced gold for overseas investors.
The early afternoon upturn reflected a technical move, with prices regaining the $422.00 downside break-out level of last week.
"It needs to hold this level ($422.00) as a baseline on the close. If it does, some confidence will return to the market and it could go up another $3 or $4," another trader said.
Traders noted that falling option volatilities, which have sunk to their lowest in some two years, was a signal of the traditional market slowdown for the northern hemisphere summer.
"This is expected to continue over the summer with the likely trading range set by technical support located between $418-415 and overhead resistance in the form of long-term moving averages pegged between $428 and $430," Standard Bank said in a daily report.
Further out, however, 30 analysts polled by Reuters have said bullion prices will post further gains this year and next on renewed dollar weakness, strong investment and global security jitters - confirming its status as a haven for money.
In other metals, silver was firmer at $7.02/7.05 from $6.94/6.97 in New York on Tuesday.
Platinum was little changed at $869.00/873.00 from $868.00/872.00, while palladium was at $186.00/190.00 from $185.00/189.00.