PRECIOUS-Gold prices slide over 2% as dollar firms, investors book profits

By Anmol Choubey and Sherin Elizabeth Varghese

Oct 22 (Reuters) - Gold prices extended declines on Wednesday, following their steepest daily fall since 2020 in the previous session, after an initial recovery gave way to renewed selling with investors locking in profits and a stronger dollar adding pressure.

Spot gold XAU= was down 2.6% at $4,017.29 per ounce, as of 1103 GMT, reaching a near two-week low, after rising as much as $4,161.17 earlier in the session. U.S. gold futures GCcv1 for December delivery fell 1.9% to $4,032.80 per ounce.

The U.S. dollar index .DXY rose 0.2% to a one-week high, making dollar-priced bullion more expensive. USD/

Bullion prices fell 5.3% on Tuesday, after notching a record high of $4,381.21 in the preceding session. Prices have gained 54% so far this year, supported by geopolitical and economic instability, U.S. rate-cut expectations, and robust ETF inflows.

"Strong gains that we saw in recent weeks meant that from a technical perspective, gold prices had entered the overbought territory and this led many traders to close positions in order to lock in profits," said ActivTrades analyst Ricardo Evangelista.

On the technical front, gold is supported by the 21-day moving average at $4,005.

Investors are awaiting the U.S. Consumer Price Index (CPI) report, due on Friday, which could offer insights into the Federal Reserve's trajectory for rate cuts. Gold, a non-yielding asset, tends to benefit in low-interest rate environments.

A Reuters poll of economists suggests the Fed will lower its key interest rate by 25 basis points next week and again in December.

Meanwhile, a planned summit between U.S. President Donald Trump and his Russian counterpart Vladimir Putin was put on hold on Tuesday, while uncertainty surrounds a possible meeting between Trump and Chinese President Xi Jinping.

"We are still in an era that is fraught with uncertainties, and that will most likely mean that any substantial dips... will generate fresh buying interest," StoneX analyst Rhona O'Connell said.

In other metals, spot silver XAG= dropped 1.8% to $47.84 per ounce. It slipped 7.1% on Tuesday.

Platinum XPT= fell 1.4% to $1,530.35, while palladium XPD= was down 1.2% to $1,391.00.

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