By John Biju and Kavya Balaraman (Reuters) -Gold prices fell over 1% on Thursday, dipping below the $4,000/oz milestone breached for the first time in the previous session, as the dollar pushed higher and gold investors booked profits following a ceasefire deal between Israel and Hamas. Silver, spurred by momentum in the gold market, strong investment demand and a persistent supply deficit, rose above $50 per ounce for the first time. Spot gold fell 1.1% to $3,993.41 per ounce, by 12:38 p.m. ET (1638 GMT). U.S. gold futures for December delivery fell 1.6% to $4,006.40. The U.S. dollar index was up 0.5% and hovered near a two-month high, making dollar-priced bullion more expensive for overseas buyers. [USD/] "Speculators are taking some gold chips off the table as the Gaza ceasefire takes effect since it reduces the temperature in a historically volatile region," said Tai Wong, an independent metals trader. Israel and Hamas signed an agreement on Thursday to cease fire, the first phase of U.S. President Donald Trump's initiative to end the war in Gaza. "Overall, though, the faith in this trade is largely undiminished. However, this rally has been so rapid that no real support comes in until $3,850," Wong said. Bullion surged past $4,000 per ounce for the first time on Wednesday, reaching a record high of $4,059.05. The non-yielding asset, traditionally considered a hedge during geopolitical and economic uncertainty, has gained about 52% this year. Its rally has been fueled by geopolitical tension, robust central bank buying, rising ETF inflows, expectations of U.S. rate cuts, and tariff-related economic uncertainties. Minutes of the U.S. central bank's September meeting, released on Wednesday, showed Federal Reserve officials agreed that risks to the U.S. job market were high enough to warrant a rate cut, but remained wary amid stubborn inflation. The Fed resumed its rate-cutting cycle in September, lowering the benchmark rate by 25 basis points. Traders are pricing in a 25 basis point cut in October with another in December, with a 95% and 80% chance, respectively. [FEDWATCH] Silver was 1.3% higher at $49.49 per ounce. The price of the metal has risen more than 70% this year, driven by the same macroeconomic forces fueling gold's rally and tight supply conditions in the spot market. "Silver is playing a bit of catch up at this point, moving more aggressively to the upside than gold in recent sessions," said David Meger, director of metals trading at High Ridge Futures. Platinum eased 1.7% to $1,635.25 and palladium eased 1.2% to $1,431.58. (Reporting by Anushree Mukherjee, Kavya Balaraman and John Biju in Bengaluru; Editing by Arun Koyyur, Kirsten Donovan and David Gregorio)
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