NEW YORK, Nov 19 (Reuters) - COMEX gold futures ended lower Tuesday after a late retreat in the face of speculative selling after U.S. equities and the dollar rose and U.N. arms inspectors got down to work in Iraq.
Traders said the safe-haven metal faltered after edging above the pivotal $320 an ounce mark, with players mainly settling down to await Thursday's gold options expiration.
December futures settled at $318.80 an ounce, off 60 cents, after trading from $320.60 to $318.60. Estimated volume reached 26,000 contracts.
"There was a little bit of fund selling capping it at $320 after the stock market improved a little bit and the euro sold off," said Jim Pogoda, a vice president of precious metals at Mitsubishi International Corp.
"Otherwise there wasn't a whole lot happening. The CPI data were in line with expectations, so very limited movement there from equities and currencies," Pogoda said.
Spot bullion was last indicated at $318.45/8.95, below Monday's New York finish at $319.00/9.50. London dealers fixed the afternoon spot reference price at $319.70.
Gold on Monday rose with oil prices as the specter of war loomed over Iraq, even as inspectors arrived to check for illegal weapons programs in the Middle East oil-producing nation.
But the gold market could be setting up for a drift to lower ground as it was technically overbought by the funds.
"I think there should be decent support down near $316.80 in the December futures, but I imagine if we break that we could trip some long liquidation," Pogoda said, pegging resistance at $320 and the broader range between $315-325.
JP Morgan technical analysts said they expected a grind back toward the $315/313 zone, and suggested buying on the dip, with only a push back above $325 negating that outlook.
Blue-chip stocks flipped higher as investors bet corporate profits and the U.S. economy were on the mend, despite a 1.9 percent jump in energy prices in October -- the biggest gain in six months.
The Consumer Price Index, the main U.S. inflation gauge, increased by 0.3 percent in October after advancing by 0.2 percent in September, the Labor Department said, reporting figures that were within Wall Street's expectations.
In silver, December futures rose 1.0 cent to $4.547 an ounce, trading from $4.54-$4.57. About 10,000 lots changed hands. Spot silver last fetched $4.54/56, versus Monday's close at $4.53/55. It fixed at $4.55 on Tuesday.
Greg Weldon, publisher of the Morning Metal Monitor report, suggested silver is undervalued compared with other COMEX metals gold and copper.
"We have turned bullish on silver looking for a move above $4.63 basis December to kick off a move to re-jig closer to where gold is, perhaps above $5," he wrote. "From our current level of $4.55 we would risk the Nov 4 low of $4.435."
NYMEX January platinum shed $3.60 to end at $592 an ounce after setting on Monday a contract high of $602.50. Spot platinum was last at $595/600.
December palladium fell $4.70 to $278.30 an ounce after bouncing back from a contract low of $272.20 earlier. Spot palladium was at $274.30/286.30.