The gold price fell to $1,655 per ounce Tuesday morning in London - 1% up on the week so far - while stocks and commodities were mostly flat ahead of Slovakian parliament vote that could jeopardize efforts to tackle the euro-zone debt crisis.
Earlier on Tuesday the gold price hit its highest level in over a fortnight at $1685.
"The [gold] market is starting to show some price sensitivity around the current level," said one Hong Kong bullion dealer during Asian trading.
"Volumes remain light with little conviction evident in the precious metals markets," agrees Marc Ground, commodities strategist at Standard Bank.
"We don't expect a strong push higher today...[but] strong support around $1,650 from physical buying is still very much in place, which should protect gold from significant downside."
The Hong Kong dealer reports sales of contracts for "four nines" gold - which is 99.99% pure - came close to hitting a new record on the Shanghai Gold Exchange yesterday, as traders returned from China's National Day Golden Week last week.
"This super strong post Golden Week sales figure implies a very upbeat Q4 2011 and Q1 2012 physical market," he says, adding that peak sales volumes are normally hit around January or February.
Silver prices meantime fell to $31.42 - down from $32.54, but still a 0.8% gain on the week.
Following a four-day rally, European stock markets traded sideways Tuesday morning - with the FTSE showing a 0.7% loss and Germany's DAX down 0.2% - as investors awaited a parliamentary vote that could derail euro-zone rescue plans.
Slovakia's parliament is due to vote today on whether or not to ratify the European Union agreement of July 21, which includes increasing the scope of the European Financial Stability Facility - the euro zone's EUR440 billion ad hoc bailout vehicle set up last year.
The Freedom and Solidarity Party (SaS), which is one of the four members of the ruling coalition, has said Slovakia should reject the creation of the European Stability Mechanism - the permanent bailout fund due to replace the EFSF in 2013 - and has made this a condition of its agreeing to approve the July 21 agreement. SaS also wants Slovakia's participation in any EFSF rescues to be restricted.
"We are going to support countries like Italy via bond buys," says SaS leader Richard Sulik.
"We will be saving French banks holding billions in assets," he adds, pointing out that Slovakia is one of the smallest economies in the Eurozone.
Slovakia is the only Eurozone member yet to ratify the agreement, following Malta's approval on Monday.
"A rejection of the measures [by Slovakia] would probably result in a second vote being called almost immediately," says a note from Mitsui Precious Metals this morning.
"[However it] could jolt the markets and erode some of the confidence that has accumulated over the past few days."
"I don't think [the vote] is going to be a deal-breaker," adds James Buckley, fund manager at Baring Asset Management in London.
Elsewhere in Europe, leaders have postponed by one week a crisis summit that was due begin next Monday.
"Further elements are needed to address the situation in Greece, the bank recapitalization and the enhanced efficiency of stabilization tools," explained European Council president Herman van Rompuy yesterday.
"This timing will allow us to finalize our comprehensive strategy on the Euro area sovereign debt crisis."
Germany has led calls for private sector creditors, including banks, to take greater losses on their Greek debt holdings than the 21% agreed on July 21. Jean-Claude Juncker, who chairs the Eurogroup of single currency finance ministers, said this week that banks' losses on Greek debt could be more than 60%.
The European Central Bank has said it is opposed the imposition of private sector losses.
"The high interconnectedness in the [European Union] financial system has led to a rapidly rising risk of significant contagion," ECB president Jean-Claude Trichet told the European Parliament Tuesday, in his last appearance before he steps down at the end of this month.
"Sovereign stress has moved from smaller economies to some of the larger countries. The crisis is systemic...it threatens financial stability in the EU as a whole and adversely impacts the real economy in Europe and beyond."
Hedge fund investor John Paulson meantime saw his gold investment fund lose 16.4% of its value in September - compared to a fall of just 11% in the gold price - according to the Wall Street Journal, which cites "people familiar with the situation".
Ben Traynor is editor of Gold News, the analysis and investment research site of gold ownership service BullionVault. He was formerly editor of the Fleet Street Letter, the UK's longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.