NEW YORK, Nov 19 (Reuters) - After days of trying, COMEX gold poked above $400 an ounce early Wednesday. But it slipped back before open-outcry trade opened, leaving players hoping for another dollar fall to log their first $400 trade.
December gold rose to $400.70 in Asia, its highest since March 1996, as the euro surged to a lifetime high against the dollar, making gold more affordable in Europe.
Profit-taking kicked in overnight and dealers said some gold companies were quick to hedge some production by selling forward.
"I think we will definitely crack that level and I think all the guys that are sellers above $400 will be buyers above $402.50, especially the options guys," said Kevin Grady, a vice president on the floor at Refco.
"Right now a lot is trading off the dollar, and everybody watching that euro," he said.
December gold at 9:41 a.m. EST (1441 GMT) was down $1.10 at $396.50 an ounce, just above a session low of $396.10.
Spot gold was at $395.60/6.30, down from the close at $396.50/7.25. London's early fix was $397.15 an ounce.
With U.S. troops facing deadly resistance in Iraq and the specter of more al Qaeda attacks, more investors are seeking safe havens like gold and U.S. Treasury bonds.
A pullback in the euro back from it $1.1977 high took away some of gold's support.
The volatility in prices in recent days has been magnified by last-minute position adjustments in the run-up to options expirations Monday on the COMEX and in London over-the-counter trade.
Most of the interest has been in December $400 calls, hedging by options desks may accelerate the move to it, even as they try to cap the market at $400 to prevent the options from expiring in the money.
"The big strike is $400 Monday. It going to gravitate right to that," said a bullion trader. "It's a bit of a war right now."
He predicted gold would trade between $395 and $405 until time runs out on COMEX options at the end of trade Monday.
December silver was off 3.7 cents at $5.33 an ounce, trading in a $5.415-$5.295 range. Spot silver fetched $5.31/33, down from $5.34/36. It fixed at $5.32 on Tuesday.
At the NYMEX, January platinum was down $7 at $766.00 an ounce, consolidating under Tuesday's contract high at $779. Spot platinum fetched $764.00/769.00.
December palladium fell $6.20 to $197.25 an ounce. Spot was at $193.00/198.00.