Gold price falls from 2-month high, physical buying lags; Silver comes off 3-month highs

Jun 25 2014, 10:18 IST
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SummaryGold price fell on Wednesday as physical buying dried up after prices jumped to their highest level...

Gold price fell on Wednesday as physical buying dried up after prices jumped to their highest level in two months in the previous session, while silver also slipped from a three-month top.

Weaker equities sent gold to its highest since mid-April on Tuesday but the rally fell far short of gains seen on Thursday last week, when prices rose by the most in nine months on the U.S. Federal Reserve's lack of commitment to raise interest rates and violence in the Middle East.

Gold dipped $6.24 an ounce to $1,311.36 by 0304 GMT, after rising to $1,325.90 on Tuesday, its strongest since April 15. It has gained nearly 9 percent so far this year.

"We will now have to see whether gold's advance will re-accelerate going into the balance of the week, especially now that the equity markets are looking a shade more wobbly just as geopolitical tensions continue to simmer," said Edward Meir, analyst at INTL FCStone.

"But ... the fact that the complex is not building on last week's gains continues to trouble us."

U.S. gold was at $1,312.30 an ounce, down $9.

"People are buying less gold lately, compared with when the price was below $1,300. After gold crossed $1,300, we saw short covering but after that, there's not much interest. We heard some investors may want to sell back at $1,325 or $1,330," said a physical dealer in Hong Kong.

The dealer was also cautious in his outlook for Singapore Exchange's planned physically backed gold contract.

The exchange said it will launch a physically deliverable gold contract to meet demand in Asia. The contract, expected to be launched in September, is the first wholesale 25 kilobar gold contract to be offered globally.

"I am not sure if individuals will buy such huge amounts of gold. I think they prefer smaller quantities," the dealer said.

Gold prices should, however, find a floor as the deepening crisis in Iraq burnishes the metal's safe-haven appeal.

U.S. Secretary of State John Kerry urged leaders of Iraq's autonomous Kurdish region on Tuesday to stand with Baghdad in the face of a Sunni insurgent onslaught that threatens to dismember the country.

Among other precious metals, silver, which often tracks gold, dipped to $20.68 an ounce. It had rallied to $21.14 an ounce on Tuesday, its highest since March 18.

Platinum and palladium were also weaker after posting modest gains on Tuesday on lingering supply worries.

The world's top three platinum firms signed a wage deal with

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