Gold pared advance on Wednesday trading after reaching one-week high after the ECB offered 489 billion euros of three-year funds to 523 European banks, above estimates of 310 billion euros, raising concerns banks are heavily dependent on the ECB funds. The announcement offset the improvement seen in the sentiment on Tuesday after German business confidence unexpectedly advanced for the second month, where the business climate indicator surged to 107.2 in Dec. from 106.6 in November, while U.S., housing starts showed a rise to 685 thousands in Nov. from 627 thousands. Also, a Spanish bond selling witnessed a rise in demand and decline in yield, where the main focus in the market is still on the latest developments in the euro area. Meanwhile, concerns are very high that the escalating European debt crisis would haunt global recovery outlook in 2012. The shiny metal has been affected by tensions in markets where it lost its characteristic as a safe haven where it currently moves side by side with equities at the time where the dollar and yen became the most favorite refuges. Spot gold is currently traded around $1615.96 an ounce after recording a high $1641.58 and a low of $1607.55. Now, the shiny metal is fighting to remain above the physiological level of $1600. Crude oil, on the other hand, is currently traded higher at $97.85 a barrel compared with the day's opening of $97.57. In the currency market, the dollar showed some advance after fluctuating between losses and gains, according to the dollar index, which tracks the greenback's movements versus six major currencies, which is currently hovering around 79.93 compared with the day's opening of 79.83.
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