Gold prices fell further away from an 18-year high in Europe on Wednesday as investors cashed in on hefty profits made this month ahead of a long holiday weekend in the United States. Asian investors earlier sold gold bars after the metal hit $495.35 an ounce on Tuesday - its highest since December 15, 1987.
Spot gold fell to $488.60/486.40 an ounce by 1542 GMT, down from $494.00/494.75 late in New York on Tuesday. "It's run out of puff today," a senior trader said.
"The market is quite volatile, though, and there's certainly a broader interest... You always get more players coming in when things start moving around."
At its peak on Tuesday, gold had gained nearly nine percent in just two weeks. Its performance in dollar terms has been more than matched by gold priced in other currencies, with yen gold notably rising sharply since the start of the month.
Traders also noted gold's rise came in the face of a stronger dollar, which in the past has triggered selling, and weak oil prices that have caused benchmark commodity indexes like the GSCI to slide - the preferred entry door into the natural resources sector for pension and mutual funds.
Gold's pause was welcomed by most traders and had been expected ahead of the US Thanksgiving holidays at the end of the week that will shut the New York gold futures market on Thursday and Friday.
Thin liquidity will certainly create volatile conditions into the end of the week, but analysts felt fund buying should rear its head again should prices fall below $480.
"There is just a very good tone in the market. They (investors) have got $500 in their nose and I am sure we'll see it very soon," the trader said.
Silver, which has also gained strongly in recent weeks, tracked gold and fell back to $8.09/8.11 an ounce, down from New York's previous $8.18/8.20 late in New York.
Some were doubtful that gold would be able to sustain a move above $500 an ounce for very long. Previous forays into such rarified atmospheres have been short and sweet.
In December 1987, it held above for just one day, while in early February 1983, it managed a few attempts, peaking at $509 before subsiding back to around $340 by the end of that year.
Traders said gold may struggle again this time round, especially in an environment of rising interest rates, which would mean the precious metal would have to put in a robust performance to stop investors shifting to higher yield assets.
Spot platinum was unchanged at $970/975 late in New York. Sister metal palladium slid to $249/252 from $257/261 an ounce.