Gold and silver that bounced off key short-term support levels on Tuesday dropped again as a sudden North Korean attack on South Korean territory sparked dollar buying by cautious investors. However, an appeal for peace by China and South Korea has helped the commodities recoup some of the losses.
The US dollar soared to 1,170.9 against the South Korean currency, its highest since September 9 and nearly 4 percent on the day. The Korean won is now trading near 1,160 per dollar levels. The greenback had jumped to 83.83 against the yen on the news, its highest since October 5, before retreating to 83.34, little changed from Monday's close.
Also, key technical supports make the downward trajectory bumpy for the metals, probably aided by the long-term bullishness for the precious metals while many also believe that the US dollar will weaken further.
As of 9:35 GMT, an ounce of gold was at $1,365.20, moving off the day's low of $1357.7 and after hitting $1,369.75, its highest since November 15. If the metal alls below the $1,358 level, $1,353 could prove next strong support, which is 38.2 percent Fibonacci retracement from its November 16 low. If it resumes the upward trend, $1,375 seems to be the next target for the yellow metal.
Silver was at $27.65 per ounce, bouncing off the day's low of $27.42 and after rising as high as $27.87, close to the 12-day high of $27.9 hit in the previous session. If the metal weakens further and falls below the $27.4 support, $27.2 could be the next target, which is 23.6 percent Fibonacci retracement from its November 16 low.
Platinum was at $1,662 per ounce, moving off day's low of $1,647.65 and still higher than its previous close of $1,658.4. Palladium was at $692 an ounce, bouncing off day's low of $683.97 and compared with Monday's close of $690.97.
Gold and silver had fallen off their multi-day highs in early trades in line with other commodities that tracked growing pessimism about the health of Europe and continued fears that China will soon take more steps to combat inflation in the country.