Gold slipped on Wednesday in a technical correction following an 8 per cent rally since mid-December that was stoked by fear about US President Donald Trump’s protectionist trade policies.
Spot gold prices dipped 0.3 perc ent to $1,204.80 per ounce at 0416 GMT. US gold futures slipped 0.5 per cent to $1,204.80 per ounce.
The dollar index , which measures the greenback against a basket of currencies, fell 0.1 per cent to 100.220.
“Gold prices have moved higher since the beginning of the year and need some technical correction in the very short-term,” said Jiang Shu, chief analyst at Shandong Gold Group.
“Generally, there would be huge volatality during the Spring Festival in China as the markets are closed for a week. Gold might test the levels of $1,185 during the period.”
Spot gold is due for a deep correction, following its failure to break a strong resistance at $1,219 per ounce, Reuters technical analyst Wang tao said.
“Gold seems to be stuck in the range of $1,210 as the market lacks risk-off stories,” a Singapore based trader said.
Trump’s protectionist statements and a lack of detail on policy have led some investors to opt for gold, which is often seen as an alternative investment in times of geopolitical and financial turmoil.
The metal hit a two-month peak of $1,219.59 on Tuesday. On Monday, he formally withdrew from the Trans-Pacific Partnership trade deal and told US manufacturing executives he would impose a hefty border tax on firms that import products after moving American factories overseas.
Trump signed orders on Tuesday smoothing the path for the controversial Keystone XL and Dakota Access oil pipelines in a move to expand energy infrastructure, boost jobs, and roll back key Obama administration environmental actions, which helped boost stock markets.
Holdings of SPDR Gold Trust , the world’s largest gold-backed exchange-traded fund, fell 0.37 percent to 804.11 tonnes on Tuesday from 807.07 tons on Monday. Silver dropped 0.4 percent to $17.01. Platinum fell 0.2 percent to $993.80, after hitting a high of $1,004.50 in prior session, its best since Nov. 10. Palladium inched up 0.2 percent to $787.25. It hit a more than 1-1/2-year high of $796.20 in the previous session.