GOLD futures fell overnight in the U.S. despite a markedly weaker U.S. dollar, as some of the risk premium from euro-zone debt fears left the metal and as it pulled back from an area of price resistance.
April gold fell $6.50, or 0.6 per cent, to settle at $1,101.70 an ounce on the Comex division of the New York Mercantile Exchange. The contract's lowest point for the day was $1,097.30, its softest print since Feb. 25.
The dollar fell against most rivals on reports that the Obama administration plans to nominate Federal Reserve Bank of San Francisco President Janet Yellen for vice chairman of the Federal Reserve Board, leading some to think that monetary policy may stay loose for a while.
A weaker dollar, especially on fears of loose monetary policy, would ostensibly support gold because the metal has been trading as a risk play in recent months, in part because of easy money. Also, gold often rises when the dollar falls because a weaker greenback makes the dollar-denominated metal less expensive for purchasers using other currencies, boosting demand.
Although the metal was somewhat supported by the weaker buck, gold began to pull back after failing around $1,119 resistance, said Ira Epstein, director of the Ira Epstein division of The Linn Group.
"Momentum is down," said Larry Young, senior trader with Infinity Futures. The metal hit resistance around $1,120 an ounce, but support remains around $1,100.
Gold slipped in dollar terms as its price in euros also declined.
As fears about Greece and euro-zone debt ease, participants are unwinding some of the safe-haven trade that had sent them into gold and out of the euro, said Frank Lesh, broker and futures analyst with FuturePath Trading. Although the metal has been behaving as a risk play in dollars recently, it has retained some safe-haven allure for buyers in euros.
"It seems like they're unwinding some of that flight-to-safety into gold," Lesh said.
Silver futures followed gold prices lower, said Larry Young, senior trader with Infinity Futures. Comex May silver lost 11.2 cents, or 0.7 per cent, to settle at $17.048 an ounce.
Platinum futures lost ground as participants booked profits, a trader says. Palladium finished in positive territory, but it was off its highs on profit-taking as well.
Nymex April platinum lost $4.30, or 0.3 per cent, to $1,608.40 an ounce, while June palladium on the exchange rose $2.15, or 0.5 per cent, to settle at $463.15.
