Gold retreated from a two-week high and silver slumped 4 percent on Thursday on steadier European shares and after Chinese market participants returned from a week-long holiday, selling the metals to lock in profits. Spot gold eased 0.4 percent to $1,139.66 an ounce by 1404 GMT. The metal had climbed to $1,153.30 in the previous session, its highest since September 24, due to a lower dollar. Silver fell as much as 4.2 percent at $15.36. The drop followed silver's four-day rally to a 3-1/2-month high of $16.10.
Gold had gained $30 an ounce during China's holiday between October 1 and October 7, while silver gained about $1.50 in the same period, as the dollar weakened on sluggish US economic data. The dollar steadied ahead of the minutes from the Federal Reserve's September meeting, while European shares recovered after a low start.
"I think we are going to keep bouncing around for the rallies to be sold until we get a bit more clarity," ICBC Standard Bank analyst Tom Kendall said. "The minutes may give people something to chew on but basically the Fed in their statement gave a fairly clear idea of what they were looking at," he added. Kendall said that there are a few data points in the next weeks, including inflation indicators, which will be crucial in shaping the Fed's rate decision at a December policy meeting.
Markets were watching for US central bank officials' views on the global economy and the impact on US monetary policy. The US central bank opted not to hike rates in September in the wake of cooling global growth and fears of a deepening slowdown in China. Fed Chair Janet Yellen said a rate hike would come this year, but a recent string of weak US economic data has prompted the market to push back expectations. A delayed rate rise could support gold in the near term. The metal had earlier come under pressure from expectations that the Fed may raise interest rates this year, potentially lifting the opportunity cost of holding non-yielding bullion. Elsewhere, SPDR Gold Trust, the top gold-backed exchange-traded fund, said its holdings fell 0.26 percent to 687.20 tonnes on Wednesday. Platinum fell 0.2 percent to $939.25 an ounce and palladium rose 0.3 percent to $698.47 an ounce.
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