Gold traded flat early on Wednesday, as renewed fears about a worsening euro zone debt crisis along with wider concern about the global economy dampened the metal's allure as a traditional inflation hedge. Analysts said that some investors could take profits after gold had climbed for four consecutive months prior to October. The failure of recent rallies to break above $1,800 an ounce also triggered technical pressure.
The metal reached an 11-month high on Friday on hopes that the Federal Reserve, European Central Bank and other major central banks would continue pumping money into the global economy to stimulate growth, which has boosted gold's inflation-hedge appeal. "Additional monetary policy easing in the United States and other countries is no longer fresh news, and so we do not anticipate further significant buying of gold based on monetary policy accommodation alone," said James Steel, HSBC's metal analyst.
Spot gold was down 0.1 percent at $1,762.70 an ounce by 11:10 am EDT (1510 GMT). Bullion was still within reach to a 11-month high of $1,795.69, which marked the loftiest price since November. US COMEX gold futures for December delivery were 40 cents lower at $1,764.60, with trading volume on track to finish sharply below average, preliminary Reuters data showed.
Silver, however, climbed 0.6 percent to $34.05 an ounce, boosted by better industrial-demand outlook as crude oil and base metals recovered after their recent losses. Bullion tracked US equities lower, after the International Monetary Fund on Wednesday urged European policymakers to deepen the financial and fiscal ties within the euro area to restore sagging confidence in the global financial system.
Purchases of exchange-traded products (ETPs) reflected investors' positive outlook for bullion in the long term. Bullion backed ETPs rose to a record high on October 9. A Reuters poll of 27 analysts released Wednesday showed they remained bullish on bullion in the long term. Analysts unanimously forecast a record high average price of $1,690.00 an ounce in 2012, up a touch from an estimate of $1,685.00 at the end of the second quarter and $1,765 suggested in January.
Analysts expect the metal to book a thirteenth successive year of gains in 2013, reaching an average price of $1,853.75. Among platinum group metals that are mostly used as auto catalytic converters, platinum fell on signs that industrial unrest in South Africa, home to the largest platinum reserves, was abating.
Spot platinum was down 0.3 percent on the day at $1,674.75 per ounce, while palladium was down 0.2 percent at $651.47 an ounce. Palladium also fell after data from China showed a decline in vehicle sales in September versus the year earlier period, the China Association of Automobile Manufacturers (CAAM) said on Wednesday.