COMEX gold felt pressure from a backtracking euro early Friday, getting fleeting support after a surprising jump in the US January Consumer Price Index suggested inflation may have bottomed.
"Gold is 100 percent looking like a euro play here. I think people are getting a little tired of that," said Robert Gottlieb, head of bullion trading at HSBC.
"We had some support underneath but obviously it's becoming just a currency play and not a commodity play."
April gold was down $4.40 at $405.90 an ounce, trading from $412.00 to $405.50. Spot gold was priced at $406.55/7.25, down from its late quote at $409.30/0.00. London's morning fix was $408.25.
The Labour Department said CPI rose 0.5 percent last month, more than December's 0.2 percent rise and the 0.3 percent expected by economists. Excluding food and energy, core CPI was up 0.2 percent, as expected.
Gold tends to move tick for tick with the euro because the precious metal is seen as an alternative currency as investors move in and out of the dollar.
The euro was at $1.2631/35, down from $1.2711/17 late Thursday. The 5-year-old currency touched its highest price ever against the dollar Wednesday at $1.2927.
Dollar disinvestment lifted April gold to a 15-year high of $432.30 on January 6. The contract fell to $395 early this month.
Unlike silver and base metals, which have surged recently, gold is having trouble returning to its loftiest levels, putting in a double-top formation on the charts around $418 this week.
COMEX March silver was down 8.8 cents at $6.57 an ounce, trading from $6.70 to $6.57. It hit a 6-year high of $6.88 on Wednesday.
Spot silver fetched $6.60/62, down from the close at $6.64/66. London's fix was $6.6075.
Silver lagged last year when gold rose 20 percent on safe-haven buying. Funds have chased silver higher this year, tightening the gold-silver ratio and, because it is also lumped in with industrial commodities, betting that silver will benefit from the global economic recovery.
NYMEX April platinum was down $6.30 at $847.00 an ounce. Spot was priced at $851.00/855.00.
March palladium was $9.25 lower at $234.00 an ounce. Spot was at $232.00/237.00.
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