Gold falls from 11-week high on stronger dollar, profit-taking

Key Points
  • Gold down after four sessions of gains
  • Syria crisis and U.S.-China trade row underpin gold
  • Silver retreats from highest in nearly two months
Source: World Gold Council

Gold retreated from an 11-week high on Thursday, with investors booking profits as the U.S. dollar gained, but bullion's losses were limited as investors remained worried about rising military tensions in Syria and lingering concerns of a trade war with China.

Snapping a four-day winning streak, spot gold fell 1.24 percent at $1,336.11 per ounce by 3:26 p.m. ET. U.S. gold futures for June delivery settled down $18.10, or 1.3 percent, at $1,341.90

The dollar index gained against a basket of currencies, dragging commodities priced in the green back. "There's profit-taking and a little recovery in the equity markets," said Chris Gaffney, president of world markets at EverBank.

"There's still a good solid floor underneath the precious metals with Syria and trade tensions with China, so I think we've got a floor around $1,340." Underpinning bullion was news that British ministers planned to gather to discuss whether to join the United States and France in possible military action in Syria that could bring direct confrontation between Western and Russian forces.

On Wednesday, U.S. President Donald Trump warned Russia of imminent military action in Syria over a suspected gas attack, declaring that missiles "will be coming" and lambasting Moscow for standing by Syrian President Bashar al-Assad.

Gold is often used as a store of value during times of financial or political uncertainty, generally gaining along with assets such as the Japanese yen and U.S. Treasuries.

"Expectations are that $1,350 will act as an initial pivot point for near-term pricing," said MKS SA precious metals trader Sam Laughlin. "However, more importantly, key downside support around $1,335 to $1,340 should provide a base for a further test through the January high of $1,366."

The U.S. economy showed signs of strength, minutes from the last Federal Reserve meeting showed on Wednesday, increasing the likelihood of U.S. interest rates hikes that could pressure prices of non-yielding gold.

Silver fell 0.84 percent to $16.49 an ounce after hitting its highest in nearly two months at $16.87 in the previous session. Platinum added 0.22 percent to $928.50 per ounce.

Palladium fell 0.10 percent to $963.50, but has surged by more than 6 percent so far this week on concerns supply from top producer Russia could be hurt by U.S. sanctions. U.S. sanctions were likely an initial trigger for a price rally, UBS said in a note, but palladium was still supported by strong fundamentals.