(Bloomberg) – Gold fell below $4,900 an ounce as the dollar advanced amid thin holiday trading, with much of Asia closed for the Lunar New Year. Silver also retreated.

The dollar rose as much as 0.4% before easing to trade little changed — after closing higher Monday — as traders kept an eye on potential tensions in the Middle East and growing risk-off sentiment across equity markets. A stronger greenback makes precious metals more expensive for most buyers.

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Bullion has been on a powerful rally that accelerated through January before an abrupt selloff at the end of that month. After peaking above $5,595 an ounce, bullion snapped back to near $4,400 in two days. Prices continue to remain volatile.

“With China on holiday for much of the week, liquidity is thinner and it’s unclear whether there’s enough momentum to push prices materially lower or whether dip buyers will be tempted back should we see renewed softness in the US dollar,” said Fawad Razaqzada, a market analyst at Forex.com. There’s “room for near-term weakness as investors unwind safe-haven positions and take profits while valuations remain historically elevated.”

Robust retail demand in China and India, the two biggest markets for physical bullion, has been a key support for prices in recent months.

Indian import data showed near-record gold and silver imports through January. The country shipped in more than $12 billion of gold over the period, the third-highest monthly total on record. Silver imports surged above $2 billion.

Many banks — including BNP Paribas SA, Deutsche Bank AG and Goldman Sachs Group Inc. — have forecast that prices will resume their upward trend, with the factors that underpinned gold’s steady ascent set to persist.

Silver, meanwhile, plunged as much as 6% before paring some losses. The white metal always has been subject to more violent swings than gold, due to its smaller market and lower liquidity. Still, recent moves – the most volatile since 1980 – have stood out for their scale and speed.

Shares in major North American gold miners fell alongside bullion, including Newmont Corp., Barrick Mining Corp. and Agnico Eagle Mines Ltd.

Spot gold fell 2.3% to $4,877.87 an ounce as of 4:50 p.m. in New York. Silver slipped 4.1% to $73.49. Platinum and palladium both declined.

–With assistance from Paul-Alain Hunt and Robin Paxton.

Gold Drops Below $4,900 in Thin Holiday Trading as Dollar Rises

Gold Drops Below $4,900 in Thin Holiday Trading as Dollar Rises

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