NEW YORK, Nov 17 (Reuters) - COMEX gold rose as close as it could to $400 an ounce without touching it Monday, before bulls lost patience and bailed out even as the threat of terrorism roiled Wall Street and reinforced gold's safe-haven status.
Saturday's deadly bombings against two Jewish synagogues in Turkey helped lift December gold to $399.90 an ounce in electronic trade overnight.
But profit taking kicked in on gold when the dollar soared against the yen after a statement Sunday, purportedly from al Qaeda, claiming responsibility and stating the radical Islamic group planned car bombings against the United States, Britain, Italy, Australia and Japan, which has rarely been singled out by extremists.
The contract accelerated lower when it hit stop-loss sell orders below $390. It bottomed at $386.00 then bounced to settle at $391.50 an ounce, a loss of $6.50, or 1.63 percent.
"Long liquidation seemed just to feed on itself through a couple of technical levels," said James Pogoda, a vice president of precious metals at Mitsubishi International Corp. "But it didn't finish all that badly."
This was the fourth failure in as many days to clear $400 an ounce, which is seen as an important psychological barrier. Funds got antsy sitting on a near-record long position, gambling on a breakout.
The euro rose to a 24-day high at $1.1848 overnight, enhancing the bullion buying power of European investors. But the dollar recovered in New York trade, removing support for gold, even as the Dow Jones Industrial average fell 1.17 percent.
The dollar's recent weakness has been a major bonus for gold and with the United States facing more attacks in Iraq, gold is seen as a form of war insurance.
"Sooner or later the market is going to see a $400 print," said Ian MacDonald, manager of bullion trading at Commerzbank. "Concerns about the Middle East are just not going away, they are building."
Global investment bank Dresdner Kleinwort Wasserstein said Monday that gold prices should hit a high of $435 an ounce in 2004, supported by increased investment demand, a weaker dollar and geopolitical tensions.
"Investment demand will become increasingly important as slowing producer de-hedging is expected to become a less significant demand factor," Dresdner said in a report.
Spot gold fell to $390.75/1.50 from the previous close at $397.25/8.00 and London's afternoon fix at $393.70.
Spot silver ended down 18.8 cents at $5.227 an ounce, plunging from from $5.43 to $5.14 as gold fell. Spot silver was last at $5.21/23, down from $5.38/40. The fix was $5.385.
NYMEX January platinum fell $16.50 to $754.30 an ounce. Spot platinum fetched $750.00/755.00.
December palladium eased $3.95 to $199.05. Spot fetched $194.50/200.50.