This might have prompted short-term traders to pull profits after Monday's price surge, which took gold prices back above $1800 per ounce.
On Monday, gold opened just above $1780 and closed at $1806 in brisk trading. This was followed by Tuesday's price action, which included a higher high and a higher low than Monday.
However, on Tuesday, gold futures were unable to close above the 100-day moving average (currently fixed at $1809.50) which on a technical basis has served as the first level of resistance, followed by major resistance, which occurs at the 200-day moving average, which is currently fixed at $1812.50.
This would have prompted short-term futures traders to pull any profits they obtained if they entered the market on Friday of last week or this Monday. This is being cited as one of the primary forces which took gold lower today. It is also important to note that market sentiment continues to favour the risk-on asset class as US equities continued to rally into Wednesday's trading session.
Bart Melek at T D Securities (commodities) said: "There has been a boost in risk appetite and the dollar has also climbed up resulting in some consolidation in the metal." He also said that some investors were taking profits on positions in gold.