Gold retreats in Europe

Gold surrendered early gains on Wednesday to edge lower as better risk appetite after a well-received Portuguese bond auction removed some safe-haven support, though a softer dollar underpinned prices. Spot gold was bid at $1,378.40 an ounce at 1423 GMT against $1,380.45 late in New York on Tuesday, having earlier risen as high as $1,386.90. US gold futures for February delivery eased $5.40 an ounce to $1,378.90.
The metal has clawed back some lost ground after posting its biggest weekly loss since mid-2010 last week, as a focus on more positive US data raised the prospect that US authorities may roll back quantitative easing measures sooner rather than later. However, in the absence of further bad news on eurozone sovereign debt and US growth, it may struggle to build on last year's stellar performance, analysts said.
"Gold is being held because of uncertainty, and more than anything because of the fear factor that has been evident since the financial crisis," said Credit Agricole analyst Robin Bhar. The precious metal took some support on Wednesday from gains in the euro, which rose 0.4 percent versus the dollar after strong demand at a Portuguese government debt auction quelled some concerns over the nation's funding problems.
"With the euro still deep (in the) debt crisis and physicals using every dip to buy the metal on anticipation of an extended rise, there is little downside possibility for gold, at least in this quarter," said Pradeep Unni, senior analyst at Richcomm Global Services.
Among other commodities, oil prices rose, with Brent crude climbing to $98 on Wednesday, their highest since October 2008, as production shutdowns in Norway and Alaska raised expectations of an accelerated tightening of supplies.
US crude also rose to within a few dollars of its recent more than two-year high. Rising oil prices can fuel demand for commodities as an asset class, lifting gold. Gold buying in India, the world's biggest consumer of the metal, eased on Wednesday as prices rose, but buying remains strong overall across Asia, particularly in China. Premiums for gold bars hit their highest in two years on Tuesday. Demand for gold to back exchange-traded funds eased off further, meanwhile, with holdings of the largest, New York's SPDR Gold Trust, slipping just over 1 tonne on Tuesday. Its holdings have declined more than 9 tonnes since the start of the year.
Holdings of the largest silver ETF, the iShares Silver Trust, also declined, to 10,725.73 tonnes on Tuesday from 10,786.51 tonnes. Silver was bid at $29.51 an ounce against $29.50. Platinum was at $1,788.74 an ounce against $1,765.99, while palladium was at $799.97 against $782.