Gold fell more than one percent in Europe on Wednesday as the market moved in step with a pressured euro, hit by stronger-than-expected US industrial production numbers that underpinned bullish expectations for economic growth.
Spot bullion dropped to $383.30/384.05 an ounce by 1505 GMT, compared with $388.75/389.90 last quoted in New York on Tuesday. Dealers pegged key support at $380 and resistance at $395.
US May industrial production rose 1.1 percent, above economists' forecasts for a rise of 0.8 percent.
In the wake of the data, the euro initially slipped to session lows around $1.2033, down about 1 percent on the day, before dropping further to trade around $1.2000.
Dealers expected bullion to stay fairly well underpinned, despite the unfavourable currency moves, supported by physical buying and more relaxed Fed comments on inflation.
Investors had pushed the dollar down one cent earlier on Wednesday after growth in core US consumer prices came out lower than markets had expected and Fed Chairman Alan Greenspan sounded less hawkish about the threat of inflation.
"I think gold is likely to head sideways. Yesterday's Greenspan comments reduced the pressure on the metal to some extent. I expect support at $381.25, this week's low, while good resistance should occur around $390," one dealer said.
In recent weeks, worries about a sharp rise in interest rates have weighed on bullion due to their positive impact on the dollar.
Higher US interest rates would make dollar-denominated assets more attractive and boost demand for dollars. But a stronger dollar makes gold more expensive for holders of other currencies.
Dealers will be alert to more data later in the day. The Fed releases its Beige Book of regional economic conditions at 1800 GMT.
In other metals, platinum mounted a small-scale rally in Asian activity earlier as bargain hunters snapped up the metal after it dropped to a five-week low of $770.00 on Tuesday when Japanese speculators unwound positions.
Spot platinum last stood at $777.00/782.00 from $771.00/775.00 late in New York on Tuesday.
Dealers said platinum prices might hold current levels for a while, but did not rule out another test lower to $760 if Japanese speculators decided to sell again.
Analysts said platinum fundamentals remained strong and saw industry buying rescuing prices from steep falls.
Palladium, which held firm amid the falls on platinum, was higher at $220.00/225.00 from $215.00/220.00 last quoted in New York on Tuesday. Silver continued to mimic moves on gold, moving down slightly to $5.64/5.67, compared with $5.71/5.74.