Gold futures in New York ended down but off session lows on Wednesday as the market continued to show it resilience and held just below the psychological level of $500 an ounce, market sources said.
Comex gold futures opened lower as investors were seen pocketing profits ahead of the long holiday weekend, but speculative buying supported prices at the lows and the market continued to consolidate after hitting an 18-year high at $495.90 on Tuesday.
Nymex metals will be closed on Thursday and Friday for the US Thanksgiving holiday. Benchmark December gold settled down 60 cents at $492.30 an ounce on the New York Mercantile Exchange's Comex division, after dealing from 487.50 to $495.30.
Its all-time high, based on the nearby futures contract, was $873, reached in January 1980. Final estimated Comex gold volume reached 110,000 lots, with 10,319 switches.
"The trend is really strong, especially after a performance like today where it looked relatively weak in the and then we came right back up to settle above $490," said Scott Meyers, senior trading analyst at Pioneer Futures.
"Five hundred dollars (an ounce) may be possible next week, but certainly in December we're going to test it," added Meyers. Since the start of the year, Comex gold has climbed 14 percent, or $59, on strong investor demand due to economic and geopolitical unease, seven straight quarters of increasing global jewellery demand, and robust physical demand from China and India.
Floor dealers said the market may have the ability to reach $500 an ounce next week as over the counter options expire on Monday, November 28, with all settlements occurring on November 30.
"We always track options expiration dates. Can you imagine what type of money upstairs is around $500? You don't think those guys are going to want the market to move toward that strike price," one Comex trader said. Comex rollover from the most-active December into February continued to play out in the market as delivery period was set to begin next week.
Open interest increased 966 lots to 350,603 lots as of November 22. In other news, Placer Dome Inc said on Wednesday its board of directors had rejected an unsolicited take-over offer from Barrack Gold Corp and it is in talks with others about alternatives.
Spot gold eased to $491.70/2.50 from $494.00/$494.75 an ounce late on Tuesday.
On Wednesday's afternoon fix in London hit $$487.60. December silver pared losses and finished the day down 4.0 cents to $8.130 an ounce, after trading in a $8.035 to $8.210 band.
Spot silver was last quoted at $8.11/13 an ounce, up against on Tuesday's late quote in New York at $8.06/08. The fix on Wednesday was at $8.05.
January platinum rose $4.30 at $984.30 an ounce, as the market continued to consolidate following last week's rally to a near-26-year high at $1,000.
Spot platinum last fetched $972/976 an ounce. December palladium ended up $1.70 to $261.95 an ounce. On Monday, it rose to $270.10, its priciest level since May 2004. Spot palladium was last at $251/255.