GOLD prices dropped over 1 per cent on Thursday as investors locked in gains following a sharp rise in the previous session.
The fall came ahead of a long weekend, although gold stayed above $3,300 (£2,481) an ounce, supported by a weaker dollar and ongoing US-China trade tensions.
Spot gold was down 1.2 per cent at $3,302.1 (£2,483.83) an ounce by 4.21 pm (BST), after reaching a record high of $3,357.40 (£2,524.06) earlier in the day. Gold has risen 2 per cent so far this week.
US gold futures fell 0.9 per cent to $3,315.0 (£2,493.23).
"Gold is in a secular bull market and these subtle pull backs on some profit taking is healthy," said Alex Ebkarian, chief operating officer at Allegiance Gold.
Gold had surged 3.6 per cent on Wednesday after US president Donald Trump ordered an investigation into possible tariffs on all critical mineral imports. This followed earlier reviews into pharmaceutical and chip imports.
"There is some risk that a trade deal could be announced over the weekend, quite possibly with Japan. However, gold's trajectory remains higher given the uncertainty and deep concern that continues to worry asset markets," said Tai Wong, an independent metals trader.
On Wednesday, Trump said there had been "big progress" in tariff talks with Japan. It was one of the first in-person negotiation rounds since earlier tariffs on global imports unsettled markets and raised fears of a recession.
The dollar index recovered slightly but was still on track for a weekly decline. A weaker dollar makes gold cheaper for buyers using other currencies.
"We remain bullish towards gold. That said, near-term corrections are likely to occur as tactical players take profits or perhaps experience margin calls triggered by another round of equity liquidations," consultancy Metals Focus said.
Among other precious metals, spot silver fell 1.6 per cent to $32.22 (£24.22) an ounce, platinum declined 0.5 per cent to $962.60 (£723.76), and palladium dropped 1.5 per cent to $957.50 (£719.17).
(With inputs from Reuters)
