Gold fluctuates after bond selling by Italy

Gold fluctuated between losses and gains on Wednesday trading after a after a successful bond selling by Italy which witnessed higher demand and decline in yields, thereby providing hopes the approval of austerity package last week helped in easing worries.

The Treasury sold 9 billion euros of 179-day bills. The demand increased to 1.7 times, compared to 1.47 times in the last auction while the borrowing cost retreated to 3.251% from the previous auction's rate of 6.504%.

Also, 2013 bills were sold for 1.733 billion euros with a yield of 4.853% from the prior auction's rate of 7.814%.

Eyes will be the selling of 2014, 2018, 2021 and 2022 bills tomorrow, especially the 10-year notes which recorded a yield of nearly 7% in the last auction, a rate that triggered the ask for a bailout by Greece and Portugal.

In general, the trading remains thin amid the year-ending holidays where the volume is expected to return back to normal levels with the beginning of the new year.

Spot gold is currently traded near the day's opening level around $1590.18 an ounce after recording a high $1592.56 and a low of $1581.60. The shiny metal is facing some bearishness after the breakout of the physiological level of $1600.

Crude oil is currently traded near six-week high at $101.05 a barrel compared with the day's opening of $101.25.

In the currency market, the dollar showed a slight drop after U.S. the Italian bond selling, according to the dollar index, which tracks the greenback's movements versus six major currencies, which is currently hovering around 79.72 compared with the day's opening of 79.80.