Selling related to options expirations sent gold futures lower early on Tuesday, and strong resistance on technical charts kept prices from breaching the $700 psychological level.
At 9:56 am EDT (1356 GMT), most-active gold for June delivery on the COMEX division of the New York Mercantile Exchange was down $2.20 at $692.00 an ounce, trading from $689.20 to $695.70. Carlos Perez-Santalla at Hudson River Futures said that trading was quiet and Wednesday's expirations of COMEX May silver and gold options kept the market in check.
"The market's waiting for tomorrow's expiration. We are seeing increased volatility ahead of the expiration, which is unusual," Perez-Santalla said. "I believe after tomorrow, after the options expire this week, the market will be free to climb."
Perez-Santalla said he pegged resistance level at $697.50. Bart Melek, senior economist at BMO Capital Markets, said in a research note that while spot gold still had a lot of upside this year with prices averaging $700 for the year, the market was tired of being driven by a falling dollar based on the prospects of a Federal Reserve rate-cut later this year.
"As a result, gold may remain range-bound until it becomes quite clear the Fed is cutting," Melek said. Spot gold was quoted at $688.30/8.90 an ounce, slightly below a late quote of $688.90/9.40 in New York on Monday. London's morning gold fix was $689.70.
In other precious metals, silver followed gold to trade lower. COMEX May silver was down 13.00 cents at $13.920 an ounce, trading from $13.910 to $14.090. Spot silver was quoted at $13.91/3.94, compared with $13.90/3.95 late Monday. Silver was fixed at $14.030 in London.
Andrew Hart, analyst at Commerzbank, said in a note that the silver market was considered to be stalling at a key technical resistance level at $14.25. "Our outlook remains positive and we ultimately look for $14.25 to be eroded and for the market to grind higher to the $14.77 which was set in February," Hart said.
July platinum was down $9.50 at $1,322.20 an ounce. Spot platinum was quoted at $1,315.00/20.00. June palladium dropped $3.75, or 1 percent, to $383.65 an ounce. Spot palladium fetched $379.00/384.00.