Comex gold and silver fell on Thursday as investors reduced precious metals positions and switched to the dollar after the euro retreated from Wednesday's record high.
Platinum and palladium trade ended due to a technical problem at the New York Mercantile Exchange, traders said. April gold ended off $2.50 at $410.30 an ounce, touching $412.60 and $408.60.
Spot gold was quoted late at $409.30/0.00, down from $410.50/1.25 late on Wednesday. London's afternoon fix was $409.80.
"It's mostly currency-related activity," said David Meger, analyst with Alaron Trading in Chicago. "There is some significant volatility going on in the currency markets, specifically the euro. That's lending some volatility into the metals."
Estimated volume was a moderate 41,000 lot. The euro was quoted at $1.2700/05, just up from the prior close at a $1.2689/95 but well down from Wednesday's lifetime high at $1.2927.
The dollar got an brief lift, indirectly pressuring gold, from news that claims for US unemployment benefits fell more than expected to 344,000 last week from a revised 368,000 the prior week.
That was balanced by the release of the Federal Reserve Bank of Philadelphia's February index of mid-Atlantic business conditions, which fell to 31.4 from January's 38.8.
The sliding dollar lifted April gold to a 15-year high at $432.30 on January 6. The contract fell to $395 an ounce this month and now appears to be consolidating between those extremes.
"In gold, I think you failed yesterday up again at $418," said a Comex floor broker, referring to two tries at the $418 level this week.
"The euro is weakening, so that's putting a little bit of selling pressure on the markets. "Comex March silver fell 4.2 cents to $6.658 an ounce, trading from $6.745 to $6.56.
It hit a six-year high at $6.88 on Wednesday. Spot silver last fetched $6.64/66, off from $6.68/70 late on Wednesday. On Thursday's London fix was $6.6175.
Because the market is thinly traded, silver has experienced extremely large swings this year. The exchange said on Thursday it would increase margins on silver futures to $2,000 per contract from $1,500 for clearing members and members and $2,700 from $2,025 for customers.
Dealers said silver looked overbought. Funds have directed much of their firepower at the white metal, which has a dual profile as a precious metal and, because it is used in electronics and photography, an industrial commodity.
Silver has participated in the rally in base metals, tracking the surge in copper to eight-year highs on Wednesday, fuelled by global economic recoveries and Chinese demand for industrial metals.
Nymex energy and metals trade was halted around 11:30 am because of what traders said were problems with the exchange clearing system.
The exchange held a half-hour "post-close" session that ended at 12:45 pm.
The settlement in April platinum was at $853.30 an ounce, down $5.50.
Spot was last priced $853.50/858.50. March palladium settled down $5.05 at $243.25 an ounce. Spot closed at $237.50/243.50.
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