Gold slipped below a lifetime high on Wednesday as the US dollar firmed, while silver regained strength after holdings in the world’s largest silver-backed exchange-traded fund hit another record.
US government bond yields rose, lifting the dollar and weighing on commodities after President Obama proposed a deal on tax cuts and unemployment payments that could boost economic growth in the short term but raise debt levels longer term.
Gold fell $8,51 to $1,39,35 an ounce by 0645 GMT on Wednesday.
Trading was volatile on Tuesday, when gold dropped after hitting a lifetime high around $1,430 an ounce on technical selling.
But with the debt crisis in Europe far from over and tensions in the Korean peninsula still brewing, gold could try new highs again, which could lift other precious metals, dealers said.
The US and South Korean militaries said on Wednesday they would hold more joint exercises off the tense peninsula amid heightened tensions following North Korea’s deadly attack on a South Korean island last month.
“It doesn’t look like it’s bearish. We’ve just got a bit of profit taking following the dollar. I suspect it will resume its upward movement,” said Darren Heathcote, head of trading at Investec Australia.
“Silver is tracking gold’s movements and is a beneficiary of any positive sentiment for gold.”
Silver hardly changed after rising to a 30-year high at $30,68 an ounce on Tuesday before falling sharply to hit a low around $28 an ounce.
The world’s largest silver-backed exchange-traded fund, iShares Silver Trust, said its holdings hit another record at 10 941,34 tonnes by December 7 from 10 816,69 tonnes on December 6.
US gold futures for February fell more than 1% to below $1,400 an ounce.
Jewellers and investors flocked to the physical market on Wednesday after bullion prices slipped from an all-time high because of a firmer US dollar, keeping premiums steady in Singapore and Hong Kong.
Spot gold is developing a bearish trend towards the wave “b” bottom at $1,350,27 per ounce over the next few trading sessions, and an immediate target will be $1,382, according to Wang Tao, a Reuters market analyst for commodities and energy technicals.
“I’ve some physical interest here and there but it’s not that much,” said a dealer in Singapore, who trades gold bars.
“People don’t seem to know how to react to the price movements.”
The world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, said its holdings eased to 1,297,726 tonnes by December 7 from 1,298,030 tonnes on December 3.
Japan’s Nikkei average closed up 0,9% on Wednesday after briefly hitting its highest level in almost seven months, as the dollar’s rise against the yen encouraged buying after Tokyo stocks had fallen during the previous two sessions.