The uptick in tensions between North and South Korea and ongoing Eurozone debt and Chinese inflation concerns continued to bolster gold prices Tuesday while risk reduction across the broader financial marketplace weighed on the more industrial precious metals, even silver, despite positive manufacturing and service PMI data from the Eurozone and better-than-forecast US GDP and Richmond Manufacturing readings.

Reflecting the fall in risk appetite the Dow and S&P both finished down in the region of 1.3%. Meanwhile the euro slumped over 200-pts against the dollar as markets continued to absorb the EU bail-out deal for Ireland; the dollar staged a broad rebound against its major counterparts with the DXY gaining 1.3%. The CRB Index declined 0.1% with commodities weighed down by EU jitters and speculation of further monetary tightening by China.

Tuesday also saw the release of the November 2-3rd FOMC minutes and revealed signs of tension between the committee members, with some expressing concern that additional QE would put unwanted pressure on the dollar – a view share by numerous foreign finance officials.

Economic data today will show German Ifo Business Climate, Italian Retail Sales and revised GDP from the UK; US data includes Core PCE Index, Durable Goods, Personal Spending UoM Consumer Spending, HPI and New Home Sales; Initial Jobless Claims are also set for release with US markets shut tomorrow for Thanksgiving.

Given the more cautious mood amongst investors gold will likely remain underpinned in the coming sessions while the PGMs, and possibly silver, remain vulnerable to bouts of long liquidation. The proximity to Thanksgiving could also draw some pre-holiday safe-haven buying towards bullion with distain towards the euro likely to see the traditional gold/dollar break down again and both move higher in tandem.


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