Gold extended losses in late afternoon trade in Europe on Thursday, having earlier hit record highs, and was on course for its largest one-day slide in a month as the dollar recouped some losses. Spot gold was last quoted at $1,336.15 an ounce at 1456 GMT, down from a record high struck earlier in the day at $1,364.60 and down from $1,345.80 the day before.
Gold is still up 21 percent so far this year, fuelled largely by a broad decline in the dollar against other major currencies stemming from evidence of slowing growth and mounting expectations for policymakers to take fresh action to prop up the economy.
Silver also gave up gains, having earlier risen to its highest level in 30 years, and was last bid at $22.77, down 1.6 percent on the day. Spot gold was last at $1,337.75 an ounce at 1451 GMT, up from $1,345.80 late on Wednesday, but down from an all-time peak of $1,364.60 struck earlier in the day as a rebound in the dollar against the euro dented gold.
The Fed is still widely expected to resume quantitative easing - in which the central bank would buy government bonds for example and pump extra cash into the financial system to keep interest rates low - which has pushed the dollar down 7 percent against a basket of currencies in the last month.
Gold, which usually benefits from dollar weakness due to its inverse relation with the US currency, has gained nearly 10 percent in the same period. The price has risen by 2.3 percent this week, set for its fourth week of gains, and on Thursday witnessed its most volatile day of trade since mid-August, according to Reuters data.
US gold futures for December delivery hit a fresh record high at $1,366 an ounce, before easing to $1,350.40, up $2.4 an ounce on the day. Market watchers have expected gold to succumb to some profit-taking before scaling new heights as uncertainty over the global economic outlook prevails.
"The whole world uncertainty, the Western slowdown, the Eastern slowing growth, the currency turmoil, the inflation/deflation debate, it all seems supportive for gold," said Credit Agricole analyst Robin Bhar. Gold has gained more in dollars so far this month than in other currencies. In euros gold is up just 0.6 percent this month, compared to a 2.8 percent gain in dollar-priced gold, while yen-priced and sterling-priced gold are both up 1.3 percent. "We look at the reasons for holding gold and other precious metals and, above everything else, it is the idea of a store of value to protect against currency debasement," said Natixis strategist Nic Brown.
Spot silver hit a new 30-year high at $23.51 an ounce, but later eased to $23.02, down from $23.13 on Wednesday. Holdings in the iShares Silver Trust, the world's largest silver-backed, exchange-traded fund, rose to a fresh record high of 9,944.14 tonnes. The platinum group metals retained gains. Spot platinum rose to $1,723, its highest since mid-May and was last up 0.5 percent on the day at $1,702.50, while palladium hit a new nine-year peak at $602.50 and was last up nearly 3 percent at $592.00.