(REUTERS) - Gold fell on Wednesday as technical resistance prompted investors took profits after the previous session's rally and on moreuncertainty about Europe's economy.
Bullion weakened on news that Italy's economy probably contracted in the fourth quarter, discouraging reports fromGermany and France, along with lingering doubt about a rescue package for Greece.
Gold remained up 11 percent for the year, boosted by the U.S. Federal Reserve's commitment to near-zero interest rates.
We're back into the technically congested area. It's easier to take profits if you've got some than to hold onto it withthis much uncertainty going on, said Sean McGillivray, head of asset allocation for Great Pacific Wealth Management.
Gold came under pressure after it failed to break above technical resistance at the previous session's high around$1,750 an ounce, McGillivray said.
Spot gold was down 0.8 percent at $1,731.79 an ounce by 12:16 p.m. (1716 GMT).
U.S. gold futures for April delivery were down $11.90 an ounce at $1,736.50.
Gold fell along with U.S. equities as procedural arguments in Greece hindered the prime minister's efforts to push throughreforms demanded by the European Union and International Monetary Fund.
Commerzbank analyst Carsten Fritsch said the positive correlation between gold and risky assets like stock marketsappeared to be in place again after evaporating last Friday.
Analysts said economic uncertainty in the euro zone should be more supportive for gold. Germany saw its steepest drop inexports for nearly three years in December and the Bank of France said that country's economy would not grow in the firstquarter.
SILVER OUTPEFORMING GOLD
The gold-silver ratio, which measures how many ounces of silver is needed to buy an ounce of gold, hovered above 51, itslowest level in three months. For most part of 2011, the ratio was below 46, compared to a near 30-year average of 64.
Spot silver fell 1.1 percent to $33.78 an ounce.
Edward Meir, an analyst at INTL FCStone, said silver could push to the $40 an ounce level if it rises above heavyresistance at around $35.70.
Platinum prices were up 0.5 percent at $1,652.74 an ounce, while palladium was up 0.7 percent at $709.