Gold retreats after rally

Gold paused for breath on Wednesday after a rally the previous day, while the most active Tokyo futures contract rose to its highest in nearly two weeks on a weaker yen and gains in New York. Silver weakened and palladium barely moved but platinum rebounded in line with rises in Tokyo futures, where the benchmark contract held near a record high.
Spot gold eased to $659.90/661.40 an ounce from $660.70/662.20 late in New York on Tuesday, when it rose to $661.40, its highest since June 7, as the dollar weakened and crude oil reached near 10-month highs. "Investors are a little bit uncertain about the potential for gold prices to move significantly higher in the short term," said David Moore, a commodity strategist at the Commonwealth Bank of Australia in Sydney.
Despite on Tuesday's gains, gold was still below $670 a key resistance it needs to crack to sustain the upturned and regain $700 an ounce. "If the gold price was to move back to around $650 an ounce, I suspect that you might well see some people who would be buying gold on the dip at that point," said Moore.
Gold's recent failures to re-test $700, a level last seen in May 2006, have disappointed investors but bargain hunters and jewellery makers would be happy to buy at lower levels, said dealers.
Overall trading was lacklustre, with gold unable to go beyond a bid high of $661.20 ounce after bid of $660.70 an ounce. "It's just a $1 range of $660 to $661. It's very quiet today," said Leon Lee, a dealing officer at the Bank of China in Hong Kong.
Key April 2008 gold futures on the Tokyo Commodity Exchange hit an intrude high of 2,649 yen a gram, its highest since June 7, before ending up 13 yen at 2,644 yen. The yen held near an all-time low against the euro and a 4- 1/2-year low versus the dollar as investors felt confident putting on carry trades to take advantage of the low-yielding Japanese currency.
The dollar dipped to 123.22 yen off a peak of 123.76 yen hit in the week the highest since December 2002. The euro eased to 165.40 yen but was close to the all-time high of 166.12 yen hit the previous session. The euro hardly changed at $1.3425. Platinum rose to $1,293/1,298 an ounce from $1,289/1,293 an ounce.
The most active Tokyo platinum futures contract, currently April 2008, hit an intrude high of 5,096 yen per gram not far from a record high of 5,099 yen hit the previous day, before slipping.
The contract hit new record highs twice this week on the back of supply concerns after Angloplat, the world's biggest platinum producer, said on Monday it would close its biggest mine for up to seven days due to safety concerns. Silver inched down to $13.30/13.34 an ounce from $13.31/13.35 late in New York. Palladium was steady at $369/374 an ounce.