US gold futures finished slightly lower in quiet preholiday trade on Tuesday, as investors locked in profits after on Monday's rally, but traders said prices should move higher in the near term supported by decent buying by funds and trades.
Most-active gold for August delivery on the Comex division of the New York Mercantile Exchange settled down $3.80 at $655.40 an ounce, after dealing in a tight range between $654.00 and $660.30. Jonathan Josses, an independent trader in New York, said from the Comex floor that fund- and trade buying with good volume was evident in the pit.
He said institutional buyers should boost gold in the beginning of the third quarter because of the precious metal's lacklustre gains in the first half of this year. "If gold is still in favour, the funds will come back in the first few days of the quarter," Jossen said. Spot bullion ended the first half of the year up only 2 percent.
It hit a 2007 high of $691.10 an ounce on April 20 but prices have declined since then. He said, technically, August futures could test $663 or even $671 this week. Market watchers also cited profit taking and position squaring ahead of the US Independence Day holiday on Wednesday.
On Monday, futures rallied nearly $10 to end at $659.20, which marked their loftiest level in almost two weeks. George Gero, vice president at RBC Capital Markets Global Futures, said in a note that traders were lightening positions ahead of the holiday and after an expected price run-up because of heightened geopolitical tensions.
The dollar rebounded on Tuesday but still hovered near a record low against the euro after falling to within half a cent of a record low against the common currency on Monday. A weak greenback makes gold, which is denominated in US dollar, cheaper for holders of foreign currencies. Comex estimated final volume at a quiet 71,090 lots, and gold options at 4,976.
Turnover at Chicago Board of Trade's electronic 100-oz gold futures was 11,668 lots at 2:31 pm Jon Nadler, analyst at Kitco Bullion Dealers, said in a note to clients that gold was still supported by safe-haven buying on security concerns because of the recent attacks in London and Glasgow.
Nadler said that, however, investors remained on alert for any signs of fatigue in the recent rise in prices. In market news, Turkey's gold bullion imports have almost tripled in June as wedding season and loftier world gold prices helped boost consumer appetite.
Imports by one of the world's top consumers of the metal jumped by 178 percent year-on-year in June, figures from the Istanbul Gold Exchange showed. Spot gold dipped to $652.70/$653.50 from $656.70/$658.20 late on Monday. The London afternoon gold fix was set at $654.25. Comex September silver closed down 5.50 cents at $12.685 an ounce, dealing between $12.560 and $12.785.
Spot silver was quoted at $12.56/12.61 which was off the late Monday quote of $12.63/12.68. London silver was fixed at $12.600. Nymex October platinum edged down 90 cents to end at $1,294.20 an ounce. Spot platinum traded at $1,280/1,284. September palladium finished down $2.40 at $369.00 an ounce. Spot palladium fetched $364/368.