By Jan Harvey
LONDON (Reuters) - The price of gold fell from the previous day's three-week peak on Wednesday as the dollar surged to a two-week high against the euro, and European share prices jumped after upbeat Chinese trade data allayed concerns over its economy.
Silver defied weakness in other precious metals to climb to a new 5-1/2 month high, however, after a break through key chart resistance at $16 an ounce set it up for further gains.
The U.S. dollar rose 0.7 percent against a currency basket, having slid to its lowest in nearly 8 months in the previous session, while European stocks climbed 2.2 percent.
Spot gold was down 0.6 percent at $1,248.00 an ounce at 1443 GMT, while U.S. gold futures for June delivery were down $11.20 an ounce at $1,249.70.
Gold on Tuesday hit $1,262.60, its highest since March 18, as the dollar slid, but struggled to maintain those gains as the U.S. currency rebounded and stock markets rose.
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"Stronger equities and a relatively stronger dollar have put some pressure on gold," MKS' head of trading Afshin Nabavi said.
"But overall, we couldn't break $1,265 on the upside yesterday, and gold looks like a good buy around $1,240, so I would say that that is the trading range. Physical (demand) continues to be very, very slow."
Gold had its strongest quarter in 30 years in the three months to March, with the dollar slipping on a diminished prospects of further rate hikes by the Federal Reserve. The dollar has shed over 4 percent against a basket of currencies this year.
Among other precious metals, silver was up 0.4 percent at $16.23 an ounce, off a low of $15.97 an ounce, having hit a 5-1/2-month high of $16.31 in earlier trade.
The gold/silver ratio, which measures the number of silver ounces needed to buy an ounce of gold, slid to a 3-1/2 month low as silver outperformed gold. The metal's rally has gained momentum after it broke above $16 an ounce on Tuesday.
Sharp inflows into silver-backed exchange-traded funds suggest investor appetite for the metal has been strong. Holdings of the silver ETFs tracked by Reuters have risen by 946 tonnes since the start of the year.
"Silver holdings of physically backed ETFs have gone through the roof, while the ones in gold have come down," Natixis analyst Bernard Dahdah said.
Platinum, which hit a one-month high on Tuesday at $1,001.88, was at $992.74 an ounce, down 0.3 percent. Palladium was down 0.6 percent at $541.42 an ounce.
(Additional reporting by A. Ananthalakshmi in Singapore; editing by Jason Neely and Greg Mahlich)