By: Clara Denina London 16/11/2011 - Gold remained under selling pressure in European trading on Wednesday morning, depressed by higher risk appetite ahead of key economic events in the eurozone and a retreat in European countries' bond yields. Spot gold dropped $6 to $1,772.60/1,773.40 per ounce. The metal suffered another wave of selling pressure in Asia overnight after yesterday's highly volatile session. On the charts, the next support level is pegged at $1,769 and then $1,742, while resistance stands at $1,790 and $1,795 - a break of that level should facilitate a challenge of the key $1,800 mark. "We could see a renewed test of $1,800 resistance area for gold in coming days," broker Credit Suisse said. European equities pared initial declines of 0.5 percent and turned mildly positive after a two-day fall, while the euro managed to hold steady at 1.352 against the US dollar ahead of a confidence vote on Greece's new government today and on expectations that Italy's new Prime Minister Mario Monti announces his new technocratic cabinet. Today, Italian 10-year government bond yields fell nearly after breaking above seven percent again yesterday, when French 10-year bond yields rose more than 30 basis point and the yield on Spanish 10-year bonds rose above six percent for the first time since August. "More focus will be on ever-rising eurozone member bond yields, with AAA- rated France and Netherlands among the latest countries to see their borrowing costs at a record premium over Germany's," a trader said. "Continued fears over these costs should support the gold price in the coming days," Eurozone CPI for October came in as forecast at three percent, data showed. Although the European economy grew 0.2 percent in the third quarter, with healthy growth in Germany and France offsetting weakness in the Southern members and the Netherlands, economists expect a slide into recession by next year. US CPI and industrial production numbers are also due for release, with President Barack Obama earlier expressing his deep concern about the eurozone crisis. Among other precious metals, silver rose 12 cents to $34.53/34.59 per ounce - the metal is set to continue to follow gold's volatile trend. Elsewhere, platinum fell $9 to $1,632.50/1,637.50 per ounce, while palladium fell $8 to $657/663. Yesterday, refiner Johnson Matthey (JM) forecast the price of platinum to remain between $1,450 and $1,800 over the next six months, while palladium should average $650 in the same period. JM expects the platinum market to end the year in a surplus of 195,000 ounces after it recorded a deficit of 25,000 ounces in 2010, while the palladium market, which moved to a 530,000-ounce deficit in 2010 for the first time in 10 years, should return into surplus at 725,000 ounces this year, due to sales from Russian state stocks for another year. But in 2012 the platinum market should remain in surplus, albeit a small one, while the palladium market should return to deficit next year, even with Russian stock sales and increased autocatalyst recycling, it said. "In the short term, we do not envisage any sharp price rises for platinum and palladium, although prices should be well supported in the medium to long-term," broker Commerzbank said.

Source