The beleaguered region, on top of freshly awarding Cyprus emergency bailout aid as the latest victim of the sovereign debt scourge, is seeing economic data point to March being the first month in the past four of shrinking economic confidence.
Italy, the third-largest economy of the euro zone, is seeing manufacturing and retail sales struggle while economic data indicated the economy of France shrank at the end of 2012.
"The reality is that nobody knows how things will go from here," senior broker Kurt Pfafflin with Daniels Trading said. "We've only just begun: Pandora's Box has been flung wide open and we'll have to face the consequences ahead."
At 12:24 p.m. on Wednesday, gold futures increased 0.31 percent, a $5.13 rise to $1,605.03 per troy ounce.
Cyprus becomes the fifth euro zone nation to be awarded emergency bailout aid as a result of the sovereign debt crisis tearing through regional banks, markets and public finance systems.
The country was forced to make sacrifices within its banking sector in exchange for the release of emergency bailout aid, per the conditions and terms set by finance ministers with the euro zone nations.
"Gold moved above $1,600 as there is a lot of uncertainty in Europe due to Cyprus situation," senior vice president Bernard Sin with MKS Capital told Reuters on Wednesday. "People don't know how things will unfold and that uncertainty helps gold, while euro zone data was also bad. The gold market is still vulnerable to losses and may be taking the cue from the euro, which is a sell, as we head towards the Easter break."
But as March closes later this week, the yellowish metal is driving toward its first monthly gain since October of last year.
Fed stimulus in focus
Gains for the precious metal on Wednesday marked the first time it increased in four trading sessions, according to Bloomberg.
The Wednesday lift was propelled by speculation about monetary stimulus remaining in place in the U.S., host of the globe's largest economy. President William C. Dudley with the U.S. Federal Reserve Bank of New York said on Tuesday that additional stimulus policy is necessary to help the U.S. economy grow.
Last month saw pending home sales drop 0.4 percent to amount to 104.8, according to the National Association of Realtors.
"Home-sales data has provided support and Dudley's statement has helped," president Michael Smith with T&K Futures & Options in Florida told Bloomberg on Wednesday. "Also, the market has been beaten down so much that there could be some buyers coming in at these lower prices."
Monitoring equity market losses
MarketWatch reports U.S. equities were pinched on Wednesday, which prompted an increased demand for the yellowish metal.
Managing director Jeffrey Wright with Global Hunter Securities told the news source that the stronger performance of gold on Wednesday was linked with slipping equities.
But another strategist told the news source how long the precious metal will remain high is in question.
"Despite the continued reverberations regarding the Cyprus bailout and its involvement of bank deposits, gold struggled to maintain the positive momentum created in the first two weeks of March, and instead, now looks very likely to move lower, towards $1,580 an ounce," strategist Xiao Fu with Deutsche Bank told the news source on Wednesday. "That the U.S. appears the picture of stability and relative strength, has in our view, been a key contributor to the moribund performance of gold."
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