Gold dropped for the third day on Wednesday trading after a report released by the Guardian stating that Germany and France had reached an agreement regarding the expansion of the European Financial Stability Facility (EFSF) firepower to 2 trillions from the current 440 billion euros, damping demand on refuges. Despite the announcement by German Finance Ministry spokesman on Wednesday that there is no agreement between Germany and France regarding boosting the EFSF, optimism remained in markets. On the downside, Moody's downgraded Spain's credit rating by two notches to A1 from Aa2, the fifth highest investment level, while keeping negative outlook due to the vulnerability to "market stress" and sluggish growth prospects. Spot gold is traded around $1655.80 an ounce after recording a high of $1665.02 and a low of $1643.75. In the FOREX market, the dollar, yen and franc edged lower while stocks advanced on hopes the coming European Council meeting on October 23 will come out with a decisive and comprehensive plan to solve the debt crisis. The dollar fell to touch a low of 76.56 compared with the day's opening level of 77.08, according to the dollar index which tracks the dollar movements against a basket of major currencies. More bullishness was added to the optimistic sentiment after data from the U.S. showed improvement as housing starts increased 15% in September from the prior 5.5% drop and median estimates of 3.3% surge. Furthermore, U.S. CPI soared in September at the slowest pace in three months, providing clues inflation may moderate as expected by the Federal Reserve, thereby dipping demand on the shiny metal as an inflation hedge. Among other precious metals, sliver edged down to $31.65 from the day's opening of $31.82, platinum plunged to $1530.20 from $1546.50 and palladium dropped to $617.50 from $622.50 as of 14:l39 GMT.
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