By Marcy Nicholson and Jan Harvey
NEW YORK/LONDON (Reuters) - The price of gold turned slightly negative from the sharp gains made earlier on Wednesday, after a conciliatory victory speech from U.S. President-elect Donald Trump also helped the dollar rebound.
Gold had surged by nearly 5 percent to a six-week high of $1,337.40 an ounce as it emerged that the Republican nominee had triumphed over Democrat Hillary Clinton in the presidential election, a surprise for markets which prompted investors to seek refuge in perceived safe-haven assets like gold.
But gold's price later fell below $1,280 an ounce as the dollar turned higher, U.S. stocks rose sharply and U.S. Treasury debt yields touched multi-month highs. [MKTS/GLOB][USD/]
Spot gold <XAU=> was down 0.2 percent at $1,272.40 an ounce by 2:38 p.m. EST (1938 GMT).
U.S. December gold futures <GCv1> settled down 0.1 percent at $1,273.50, with volume surging above 785,000 contracts, the highest for the most-active contract on records going back to 1980.
"Mr Trump managed to sound quite conciliatory and presidential in his victory speech this morning," Mitsubishi analyst Jonathan Butler told the Reuters Global Gold Forum on Wednesday.
"This calmed the markets and helped boost the dollar, eroding gold's gains," he said. "(But) the Trump win is still essentially bullish for gold."
Trump's win threw into question the core assumption in financial markets that the Federal Reserve will raise interest rates soon.
"It's too early to predict if Trump will enhance or hurt U.S. growth longer term; however, his policies should pressure U.S. real rates lower, while greater policy uncertainty is gold supportive," said UBS Wealth Management Research in a note, forecasting gold prices at $1,350 in six and twelve months.
Davis Hall, head of forex and precious metals at Indosuez, said gold's retreat suggested upside for the precious metal was limited, but that the metal could still benefit from a Trump victory as the longer-term implications emerged.
"I still think stocks are going to digest this over a 10-day period, and 10 days from now stocks will be lower than they are now," he said.
Meanwhile in India, the world's second-largest gold consumer, the government withdrew 500 and 1,000 rupee notes from circulation.
"The concern for the gold market is that all-important fourth-quarter demand may now decline," said Metals Focus in a note.
Spot silver <XAG=> was up 0.2 percent at $18.38 an ounce, having risen to its highest since Oct. 3 at $18.996 an ounce. Platinum <XPT=> was down 1.3 percent at $989.25, while palladium <XPD=> was up 1.5 percent at $672.75, also off five-week highs for both markets.
(Additional reporting by Manolo Serapio Jr in Manila and Nallur Sethuraman, Apeksha Nair and Koustav Samanta in Bengaluru; Editing by Mark Potter, Greg Mahlich and Alan Crosby)