NEW YORK, Jan 15 (Reuters) - COMEX gold's retreat accelerated Thursday morning, breaching important chart support, with a rebounding dollar the main excuse for profit-taking on gold's recent rally to 15-year highs.
Gold was down 2.2 percent, a far steeper drop than the euro suffered. The yellow metal pulled less-liquid silver down 2.4 percent, as the stronger greenback reduced the incentive to buy precious metals.
At 10:09 a.m. EST (1509 GMT), February gold was down $9.10 at $412.80 an ounce, trading from $421.00 to $411.80, taking out $417/418 which was the breakout point on the recent rise and just Wednesday had provided solid support during gold's pullback.
Spot gold was quoted at $412.20/80, down from the close at $421.40/2.15. London's afternoon fix was $412.50.
"With currency traders and U.S. and European officials looking for a further correction in the Euro/dollar ahead of the G7 meeting in February, gold is likely to remain in a volatile mood," wrote analyst James Moore at TheBullionDesk.com. "Support should be strong between $412-$415 although a failure could lead ultimately to a test of $400."
Overnight news that Germany's economy, the biggest in Europe, shrank 0.1 percent in 2003 -- the first annual drop in a decade -- and grew only marginally in the fourth quarter, underscored the perception the surging euro is stifling euro-zone growth.
The euro fell to $1.2600/06 from the close at $1.2643/46, with traders waiting for European Central Bank President Jean Claude Trichet to hold a news conference later Thursday to see if he embellishes his remarks early this week that "brutal" currency moves were not welcome in Europe.
"The dollar firming is causing some pressure from the sell side," said James Pogoda, a precious metals vice president at Mitsubishi International Corp.
"That's when we were moving through that support level and that's when we tumbled," he said. "So we fell a bit more percentage wise (than the euro)."
There was little direct gold reaction to mixed U.S. economic news. December consumer prices rose 0.2 percent, as expected, and were up just 0.1 percent excluding food and energy.
Weekly claims for U.S. unemployment benefits fell and retail sales rose a less-than-expected 0.5 percent in December, a disappointing final result for holiday shopping.
Gold reached its highest since 1988 last week, topping at $431.50 in the February futures contract.
A Reuters poll of analysts released Thursday showed an average price forecast for 2004 of $419.50 an ounce, which would mark the third straight year of double-digit gains since gold was languishing near 20-year lows in 2001.
Meanwhile, GFMS Ltd. forecast gold would make a run at $450 during the first half of this year, after a possible profit-taking pullback. The London-based commodity research and consultancy predicted gold would average $437 during the first half.
March silver was down 16.0 cents at $6.27 an ounce, moving from $6.43 to $6.19. Spot silver was at $6.24/27 versus $6.40/42 late Wednesday and Thursday's fix at $6.315.
Silver rose to its highest in almost six years on Monday, hitting $6.795 just days after breaking above $6.00 on the last trading session of 2003.
Silver was seen averaging $5.80 this year, according to the Reuters survey.
"It's still really overcooked," Pogoda said. "Does it deserve a $6 handle? I don't think so."
NYMEX April platinum was $2.40 easier at $852.00 an ounce. Spot fetched $853.00/858.00.
March palladium dropped $6.20 to $215.00 an ounce. Spot was at $208.00/213.00.