Gold retreats as the dollar rebounds

The yellow metal declined on Wednesday trading as the dollar rebounded against majors, reducing the appeal of the metal as alternative investment.

The US dollar gained power after the rise in retail sales and after remarks from the Fed yesterday in their first-day meeting.

Bernanke said the US economy will continue to recover and said will leave interest rate at its current low level for an extended period while confirmed purchasing bonds worth $600 billion.

The recent data from the US has been showing improvement in the economy except the labor market which is still fragile. Later in the day, the US will release important inflation and industrial data.

The dollar index, which tracks the dollar movements versus a basket of major currencies, rose to a high of 79.82 from the day's opening at 79.41.

Accordingly, dollar-dominated commodities rose where oil soared to a low of $87.47 a barrel from yesterday's closing of $88.25, while spot gold edged down to a low of $1387.60 an ounce after it recorded a high of $1397.25.

Among other precious metals, platinum slipped to $1694.20 from the day's opening at $1704.50, palladium decreased to $751.70 from $757.70 and silver plummeted to $29.20 from $29.52, as of 07:50 GMT.

On the other hand, the European shared currency remained under pressure after Moody's investor services said it put Spain's Aa1 debt rating under review for a possible downgrade due the large debt burden as the fourth-largest economy in the euro zone will need 170 billion euros next year.

Debt woes are still predominant ahead of the European summit this week in Brussels.

The previous session, gold added $1.30 or 0.09% to close at $1396.00, while gold price was setin London at $1394.50 per ounce declining from $1405.00 during the AM fixing.

SPDR gold trust, the world's largest exchange-traded fund backed by bullion, edged down 3.036 metric tons on December 14 to 1,286.79.