Gold drops below $1,385 on strong dollar, other precious metals follow

Gold retreated early on Wednesday afternoon, continuing to pull back on profit-taking and a stronger dollar.

- Spot gold was last at $1,388.20/1,389, down $12.30 but off an intraday low of $1,383.80. On the charts, after plummeting through support at $1,400, $1,397 and $1,392.50, next support is pegged at $1,370. Resistance is seen at $1,427.40 and $1,431.30 and then $1,444 and $1,450.

- In the US, fiscal policy announcements from Federal Reserve chairman Ben Bernanke and President Barack Obama have seen the dollar retrace losses from disappointing US jobs data last week - it is up for the third straight day against multiple currencies - notably the yen - as US treasury yields gain. A controversial compromise agreement between Democrats and Republicans, now heading to Congress for a vote, is set to extend Bush-era tax cuts for higher earners in exchange for extended social benefit programmes.

- In Europe, approval of Ireland's budget failed to settle markets - the euro continues to weaken and peripheral European government bond yields are rising on persistent sovereign debt concerns. The euro was last trading at 1.3232 against the dollar, giving up almost a quarter of a cent. European equities were slightly higher, with the FTSE100 and CAC40 up 0.1 percent and 0.6 percent respectively and the DAX flat.

- In other precious metals, silver pared almost all of its gains - it was last at $28.87/28.92 per ounce, still up two cents. Platinum was down $10 at $1,682/1,688 while sister metal palladium was trading at $726/732, down $9.

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