Gold futures on the COMEX Division of the New York Mercantile Exchange retreated on Wednesday, following U.S. equities lower and pressured by the earlier strength in U.S. dollar, as risk appetite continued to be hit amid swelling concern over the debt plaguing the Eurozone.
The most active gold contract for December delivery lost 7.9 dollars, or 0.4 percent, to 1,774.3 dollars per ounce.
European government bond yields rose for a second day on Wednesday, despite the European Central Bank apparently rammed up purchases to try to calm market. Italian bond yields rose to more than 7 percent earlier, a level considered unsustainable.
Market analyst mentioned that the jump in interest rates in recent days indicates a further spreading of the debt-crisis contagion from Italy to other countries, as investors grow increasingly concerned about governments' abilities to pay their debts, pushing euro to a four-week low and the dollar benefited.
Gold failed to benefit from increasing safe-haven demand recently, as the dollar's ascent looked to hamper gold's continued rise, but the bullion managed to pare earlier losses after euro bounced off its lows against the dollar and U.S. stocks rebounded.
The U.S. Labor Department data showed that the cost of living in the U.S. unexpectedly dropped in October for the first time in four months, signaling that inflationary pressures may be starting to wane, dragging down gold prices, as gold is considered a hedge against inflation by some investors.
Silver for December delivery dropped 63.4 cents, or 1.8 percent, to 33.822 dollars per ounce. Platinum for January delivery fell 11. 5 dollars, or 0.7 percent, to 1,631.2 dollars per ounce.