LONDON- Gold retreated on Monday, surrendering gains made in earlier trade on the back on this weekend's air strikes on Syria, as financial markets wagered the latest U.S.-led intervention would not escalate into a wider conflict.
A softer tone to the dollar kept the metal firmly underpinned, however. Prices have trended sideways since January, buoyed by geopolitical worries but capped by expectations for further U.S. interest rate hikes and strong technical resistance at $1,360-$1,365 an ounce - their January, February and April highs.
Spot gold was at $1,342.62 an ounce at 1130 GMT, down 0.2 percent and off an earlier peak of $1,348.69. U.S. gold futures GCcv1 were 0.2 percent lower at $1,345.60 an ounce.
Forces from the United States, Britain and France targeted Syria with air strikes early on Saturday, hitting what they said were three of its main chemical weapons facilities.
However, investors shed safe-haven assets and oil prices plummeted on Monday on expectations the attacks would not mark the start of greater Western involvement in the conflict.
"Some of the risk (premium) has come down following the air strikes," Capital Economics analyst Simona Gambarini said. "Some market participants were thinking that maybe there could be an escalation of the tensions, but that has not happened and therefore prices have come down a bit."
"If you consider that the Fed is tightening we should see lower gold prices. Instead, they have been moving sideways," she said. "There is certainly some risk premium incorporated into prices ... but there is no trigger for higher prices at the moment."
Speculators raised their net long positions in COMEX gold contracts by 363 contracts to 138,212 contracts in the week to April 10, U.S. Commodity Futures Trading Commission (CFTC) data showed on Friday. CFTC/
Gold remains under pressure, however, after failing to break through chart resistance last week, dealers said.
"On Wednesday we had that breakout above $1,360 and it just went nowhere afterwards. That was really, really disappointing," ING analyst Oliver Nugent said. "The money is just waiting on the sidelines."
Dealers trimmed their short positions in silver by 3,187 contracts to 36,417 contracts, the CFTC data showed.
Silver was down 0.1 percent at $16.60 an ounce, while platinum XPT= was 0.2 percent lower at $926.10 an ounce.
Palladium was 0.2 percent higher at $988.50 an ounce after hitting a three-week high of $990.50 on Friday.
Prices rose 9.6 percent last week, their biggest weekly gain in more than a year, as concerns that supply from number one producer Russia could be disrupted by U.S. sanctions fed into a strong technical rebound following the metal's 20 percent fall from its January record high.
(Reporting by Jan Harvey; Additional reporting by Swati Verma in Bengaluru; Editing by Mark Heinrich) ((email@example.com; +44 0 207 542 7744; Reuters Messaging: firstname.lastname@example.org; Twitter: http://twitter.com/JanHarvey121))