Gold prices settled back from intra-day highs just under $450 an ounce in Europe on Tuesday afternoon, pegged back by the dollar's gains after US trade and inflation data, traders said. "It has come back a bit with the dollar - so $450 is on hold at the moment," a trader said.
US trade data for July showed that the deficit narrowed to $57.9 billion, against a forecast $59.80 billion. This had more influence than softer-than-expected producer prices, with the dollar holding on to gains against the euro.
By 1422 GMT, spot gold was at $445.20/445.90 a troy ounce, down from New York's late quote on Monday of $449.60/450.30.
Traders said funds, which took the metal to a new high for the year on Monday, took a breather. But if the market could get back over $450 gold stood a good chance of breaking back through last December's peak at $456.75, to its highest in 17 years.
Simon Weeks, director precious metals at ScotiaMocatta, said he expected the market to see relatively quiet conditions until the Federal Reserve meeting next week.
Financial markets have been debating whether the US Central Bank will continue to hike interest rates in the aftermath of Hurricane Katrina.
"People are confused at the moment. Overall I still prefer to sell rallies in metals," he said.
In the shorter term, a second London trader was looking for another attempt to move back up through $450. "If we break $450 then it should move up to $453, but if it fails at $450 again, we may see it back down to $445," he said.
High prices kept physical buyers on the sidelines in Asia though, with an inauspicious period in India over the next two weeks seen restricting dealings in the world's biggest gold consumer.
But demand should subsequently pick up there with the Indian festival of Diwali starting on November 1.
Silver drifted down to $6.88/6.91 from $7.04/7.06. Platinum edged up to $907.00/911.00 from $905.50/907.50, while palladium was stagnant at $182.00/186.00.