By Sara Sjolin and Carla Mozee, MarketWatch
LONDON (MarketWatch) — Gold futures dropped on Tuesday, retreating after the metal’s heftiest one-day rally in more than a year.
Gold for December delivery GCZ3 -0.69% , which is now the most-active contract, fell $7.20, or 0.6%, to $1,330.10 an ounce.
On Monday, August gold futures GCQ3 -0.65% jumped $43.10, or 3.3%, to $1,336 an ounce on the Comex division of the New York Mercantile Exchange. That represented both the largest one-day percentage and largest dollar gain since June 29, 2012.
The settlement was also the highest for a most-active contract since June 19 of this year, according to FactSet data.
Contributing to Monday’s leap was heavy short covering and new technical buying, “as buy-stops were hit when prices pushed well above what was stiff chart resistance at the $1,300 level,” Kitco.com senior analyst Jim Wyckoff wrote in a late-day roundup.
The rally on Monday “has left gold parked at the technical resistance level formed by its 50-day moving average and its May 20 lows. A clear break above this resistance would encourage technical traders to the view that a more significant technical rally could be in prospect,” CMC Markets chief market analyst Ric Spooner told clients early Tuesday.
A fall in the U.S. dollar DXY +0.14% against major rivals also supported gold. A lower greenback makes the metal and other commodities priced in dollars less expensive for holders of other currencies.
On Tuesday, the dollar tripped to 82.16 from 82.235 late Monday in North American trade.
Gold had risen over the past three sessions after Federal Reserve Chairman Ben Bernanke said it was too early to determine whether the central bank will slow down the pace of asset purchases at its September meeting. Monetary-stimulus measures aimed at encouraging economic growth have been considered supportive for gold prices.
Bernanke’s remarks suggesting that stimulus could remain in place a little longer than previously anticipated “helped to put the wheels in motion” for gold’s recent run higher, EverBank assistant vice president Mike Meyer wrote in daily update Monday.
“The next couple of Fed meetings should have a significant impact as to the near-term direction of metals, as any hints of procrastinating plans to taper should act as a springboard, but anything to the contrary would tend to keep it suppressed,” Meyer wrote.
The Fed’s next meeting is slated for July 30 and 31.
For the year, gold prices are still down 20%, largely on concerns that strengthening in the U.S. economy would spur the Fed to taper its asset purchases. Record outflows from gold exchange-traded products logged earlier this year reflected investor worries about dialed-down stimulus.
In other metal-futures trade Tuesday, September silver prices SIU3 -1.60% stepped back by 24 cents, or 1.2%, to $20.27 an ounce following Monday’s climb of $1.05, or 5.4%.
September copper HGU3 -0.27% dropped 2 cents, or 0.5%, to $3.17 a pound, and October platinum PLV3 -1.24% gave up $10.90, or 0.8%, to trade at $1,437 an ounce.
September palladium PAU3 -2.29% shed $14.80, or 0.2%, to price at $735.65 an ounce.
