London 17/01/2012 - Gold stepped back from an earlier one-month high in afternoon trading on Tuesday when the euro slipped from intraday highs.

Spot gold, which hit a one-month high of $1,667.90 in the morning session, fell back to $1,660.07-1,660.70 per ounce but was still up $16.35 on the close on Monday, when trading was quiet due to the Martin Luther King holiday in the US.

On the charts, the next resistance level is pegged at $1,670, while support is pegged at the 200-day moving average of $1,640.70.

Today's rally was prompted by China's GDP growth data, which came in at 8.9 percent in the fourth quarter of 2011, down from 9.1 percent in the previous quarter but above market expectations of 8.7 percent.?

Retail sales also beat expectations with an 18.1-percent increase in December compared with a forecast 17.2 percent, while industrial production grew 12.8 percent last month, against expectations of a 12.3-percent growth.

“After yesterday's US holiday, the market has rallied sharply overnight after Chinese GDP data. Since making the highs early this morning, we have consolidated between $1,655 and 1,665 and support on dips has been good,” a trader said.

But ratings agency Standard & Poor’s downgraded the European Financial Stability Facility (EFSF) by one notch to AA+ earlier today after lowering its ratings on a string of eurozone nations on Friday.

“[It] is concerned the likelihood or ability for an entity to meet its debt obligations. The ability for any entity to meet its obligations is a function of its borrowing costs,” Triland said.

Rating agency Fitch's director of sovereign international and public finance, Ed Parker, also said that Greece is insolvent and will default on its debts.

The euro hit a low of 1.2662 against the US dollar but was last at 1.2740 after manufacturing activity data showed the Empire manufacturing index rose four points to 13.5 in January, beating expectations of a reading of 10.8 points.

A further boost to the single currency came from positive German ZEW analyst and investor sentiment data showing the biggest ever jump to -21.6 in January from -53.8 in the previous month.

In other news, India has changed the import duty on gold to two percent from the previous 300 rupees per 10 grams and for silver to six percent from 1,500 rupees per kilogram, reports said.

Silver remained strong at $30.21-30.23 per ounce, up 26 cents. Platinum, which hit its best in more than one month at $1,535.50 earlier, was last at $1,521.50-1,531.50 per ounce, up $21, and palladium was $11 higher at $652-656.


(Additional reporting by Clara Denina, editing by Mark Shaw)

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