Gold prices edged higher on Thursday as the dollar declined and after world shares slipped following renewed worries about China's economy. The dollar index was down 0.3 percent, making gold more affordable to buyers using other currencies.
"Some people are a bit nervous, so I think the strategy now is that if you see uptick in gold prices you will sell," said ABN AMRO commodity strategist Georgette Boele.
Gold has risen nearly a fifth this year but has struggled in recent months. It has shed 7 percent since early September, including a slide of over $40 on Oct. 4, its biggest one-day drop in 15 months, after strong U.S. economic data. If bullish investors who are dominating the market at the moment started to sell it could create a snowball effect and U.S. retail sales data due on Friday could be a trigger, Boele added.
"There's a position risk with overall positions massively long, enormous, and people may ... give up on the idea that the price could go higher."