Tuesday’s fall in the price of gold came amid “a market-wide retreat” said one analyst, with “across-the-board selling by speculators” according to another.

Gold bullion traded near 7-week lows for US and UK investors on Wednesday morning, maintaining the drop of 1% so far this week.

Looking at the gold futures market, “The reduction in short-term spec[ulative] positions suggests that the recent move lower in gold has been as a related to short-term investors,” writes Nomura analysts in a note.

“I think what you’re seeing is a reduction of investor concerns,” counters the CPM consultancy’s managing director Jeffrey Christian, speaking to MineWeb, “reflected in investors taking some of the profits out of their gold positions.

“[Investors] are looking more to repositioning themselves for slower economic growth.”

Despite press reports that Greece will get a further two years to meet its “austerity” budget targets, the Euro currency held onto its drop below $1.30 after new German data showed consumer confidence falling to a 32-month low.

All told, the 17-nation Eurozone “sank further into decline at the start of the fourth quarter,” added the Markit PMI survey, pegging the drop in manufacturing and service output at its fastest pace in more than three years.

Ahead of Wednesday’s policy update from the US Federal Reserve, and “while recent data flow has been encouraging,” writes Marc Ground at Standard Bank, “it is still apparent that the US economy still faces significant headwinds.

“Ironically, this may encourage risk appetite in financial markets…Consensus is that the Fed will continue its current program of easing until at least Q4, 2013. We would concur, but also see the potential for further easing.”

Shorter-term, Standard Bank’s commodity team “still feel that $1700 is a significant level of support and don’t expect it to be sustainably breached amid steadily improving physical demand for the metal out of Asia.”

Given the recent price decline, “Emerging-market demand for gold bullion has picked up,” agrees London market-maker HSBC in a note, “and this may act as a backstop against steeper price drops.”

Today in India – the world’s largest consumer market, where next month’s Diwali festival will mark the peak of annual demand – dealers saw “bargain hunting” by jewelers and other stockists, according to local press.

More broadly in Asia, “Investors [were] buying a little bit,” said Ronald Leung, head of Lee Cheong Gold Dealers in Hong Kong. But “they are not that aggressive.”

Silver prices also stalled after a brief rally early Wednesday, failing to hold above $32.00 per ounce. The broader commodity markets ticked higher, as did European stock markets after an initial fall.

“Market players will be paying close attention to this afternoon’s press conference in Berlin,” says Eugene Weinberg at Commerzbank in Frankfurt, when “Draghi will be explaining the ECB’s current monetary policy to German politicians.”

Looking ahead to the US Fed announcement due early afternoon Washington time, “the bank’s commitment to an expansionary course will probably be reiterated, meaning that opportunity costs for holding gold will remain low.”

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