The bullish trend in gold seem to have come to a standstill as longs take profit amidst gold most successful week in almost six months. Year to date, the precious metal has gained about $115, a whopping 9.5 percent in less than a quarter of the year. With prices now above, $1,300 per tonne, investors may take a step back as physical buying may face a slowdown going forward.

“Spot gold retreated today after hitting a 15-week high overnight. The higher prices have spooked some physical buyers,” wrote a market report from Commerzbank. Spot gold currently sits at $1,318.65 per ounce, after falling about $8 on the day to $1,320.30.

On the fundamentals, gold investors are also following developments on India’s gold import rules that could see some changes. There has been speculations that the tough restrictions on gold imports may be eased in the coming months, adding to the friendlier attitude towards gold as a scaling back of import restrictions would be a boost to physical demand for the gold-loving country.

“Better clarity will arrive after the fiscal year ends in March and, more importantly, when elections are concluded in May. Until then, we would expect chatter surrounding India’s gold import regulations to intensify – the key is to filter out the noise from reality,’ said analyst Edel Tully from UBS.

Sister metal silver continued to hold its ground despite gold’s decline on Tuesday. The precious metal traded mostly flat yesterday, and the price is just about $0.10 lower at the current $21.75. True to its volatile nature, silver has since almost doubled the gains of gold in percentage terms and Tully expect further short-covering in silver to continue.

“The break of its own key technical levels has likely sparked interest among investors who have been keeping their distance until now…There is room for further short-covering in silver – gross shorts have increased consistently for three weeks to February 4, adding a total of 61.3moz. Despite last week’s short-covering of 37.1moz, the gross position still sits at 79 percent of the all-time high,” she added.

The PGMs mostly moved lower in tandem with the gold price, with platinum  losing $9 on Tuesday to $1,423 per ounce and continues to trade lower this morning at $1,419 currently. The palladium price was mostly flat yesterday at $740 but has since lost $5 to last at $735 per ounce.

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