Gold slipped on Thursday after rising to its highest in nearly three months the previous day as a strong dollar ignited selling in the physical sector, while platinum group metals struggled to hold gains after a rally.
Volume was light, making precious metals prone to sharp movements. Investors wary about Greece’s ability to resolve its fiscal problems could still turn to gold as a safe haven but further rallies in the dollar could cap gains.
Spot gold was at $1,146.45 an ounce by 0528 GMT, down 55 cents from New York’s notional close on Wednesday, when it rose as high as $1,152.75 an ounce, its strongest since mid-January, despite a tumbling euro.
“It’s been rising too fast, so of course there’s profit taking in the market. Everytime gold approaches $1,150-$1,152, it can’t break through, so I guess we are cautious about these levels,” said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong.
“We’re still watching developments in Greece. Sentiment is a bit bullish,” said Leung, referring to the prospect of low interest in the United States that boosts gold’s safe-haven appeal.
Palladium dropped after hitting a two-year high around $511 on Wednesday on early buying by Japanese auto catalyst makers as well as gains in gold prices.
Sister metal platinum rose as high as $1,716.50 an ounce on Thursday on the back of early buying in Tokyo platinum futures before easing slightly. The metal had risen to a 20-month high of $1,723 on Wednesday.
Platinum group metals have benefited from expectations of an economic recovery, with dealers reporting steady demand from auto catalyst makers in Japan.
The euro hovered within reach of this year’s low against the dollar on Thursday after Greece’s borrowing costs hit a new high and its banks asked for support, while the yen was firm following a drop in U.S. Treasury yields.
U.S. gold futures for June delivery fell $4.9 an ounce to $1,148.1 an ounce, having risen to its strongest in nearly three months the previous day.
The world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, said its holdings stood at 1,130.737 tonnes by April 7, up 0.914 tonnes from the previous business day.
“I think gold is consolidating. There’s some physical selling but the amount is not substantial,” said a dealer in Hong Kong. “Consumers are waiting for fresh leads,” he added.
Indian jewellers are stocking up as the wedding season kicks in in the world’s largest gold consumer, but higher bullion prices have ignited selling in other parts of Asia, dealers said on Wednesday.