Fears of sovereign debt contagion within the Eurozone have resurfaced

Yesterday saw the precious metals move higher ahead of the FOMC statement as dollar weakness combined with safe-haven demand. However, this support soon evaporated as the Fed maintained its commitment to $600bn of treasury purchases. Unsurprisingly, the FOMC reiterated that the economic recovery, while continuing, is still insufficient to reduce unemployment.

Better-than-expected US retail sales figures also bolstered confidence in the economy on Tuesday, reducing the safe-haven appeal of precious metals, while steady CPI data and solid manufacturing figures this afternoon have also eroded support. Meanwhile, fears of sovereign debt contagion within the Eurozone have resurfaced, Belgium the main culprit this time, which has seen the euro come under further pressure against the dollar.

Gold support is at $1,382 and $1,380. Resistance is at $1,406 and $1,415.

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