Gold dropped to around $930 per ounce on Thursday after the dollar firmed against the euro, reducing the appeal of the precious metal as an alternative to the U.S. currency.
At 3:09 p.m. BST, spot gold was trading at $931.70 per ounce against $945.00 per ounce in late New York trade on Tuesday. Gold had risen by almost $90 per ounce since slipping to a low of $858.30 per ounce on June 24
Gold has been pushed higher by rising oil prices, heightened risk aversion and dollar weakness recently as investors have looked for a safe store of wealth during the current economic turmoil.
However, profit-taking ahead of the July 4 weekend in the U.S. was encouraged by a stronger tone in the dollar on Thursday.
The dollar firmed off a two-month low against the euro on a combination of better than expected employment figures in the U.S. and some neutral comments from the European Central Bank.
ECB President Jean-Claude Trichet was noncommittal about the future direction for interest rates in the eurozone, in the wake of the central bank's widely predicted 25 basis point rate hike on Thursday.
The near 30 cent decline in the dollar's value against the euro since the start of 2007 has been one of the major drivers of gold's move higher.
The precious metal has added over $300 per ounce in the last 18 months, with gold bought as an alternative to the most common form of global currency reserves.
The precious metal remains well supported by rising inflation concerns, with oil prices smashing records above $145 a barrel in New York and London.
"The price of oil is fuelling inflation fears and pushing up gold," said analysts at Commerzbank.
Among other precious metals, platinum was down at $2,028 per ounce from $2,076 per ounce, while sister metal palladium slipped to $458 per ounce from $466.25 per ounce. Silver dipped to $18.12 per ounce from $18.31 per ounce.
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