Gold bullion prices hovered below $1,650 per ounce Monday morning in London – well within their range of the past four weeks – as European stocks edged higher while commodity prices fell.
The euro meantime sank to a two-month low against the dollar, as investors turned their attention to rising Spanish government borrowing costs.
On China's Shanghai Gold Exchange, contracts equivalent to around 7.3 tonnes of gold bullion changed hands in Monday's trading.
"Current levels are by no means excessively weak," says a note from investment bank UBS, "but the fact that average daily turnover sits at just about half of the 18 tonne all-time high seen last year is in itself confirmation that there is less gold fever in China this year versus last."
Authorities in Beijing meantime have widened the yuan's trading band against the dollar from a 0.5% maximum daily move to 1%.
Silver bullion fells to $31.22 per ounce – close to four month lows – before recovering some ground in Monday morning's London trading.
"The key downside risks for silver," says a note from Morgan Stanley, "are that the weaker economic outlook in 2012 and 2013 will cut fabrication demand, but not enough to take prices back to levels that would deter anticipated strong mine production growth and a rising surplus."
Sovereign debt stresses in the euro zone are expected to dominate this week's International Monetary Fund meeting, where European officials are expected to ask the IMF to expand its lending capacity to combat a fresh potential crisis, newswire Bloomberg reports.
At February's G20 meeting, European leaders were told Europe needed to do more before non-European nations would consider a bigger IMF contribution. There has since been agreement to increase the size of the Eurozone's 'firewall' to €800 billion, although only €500 billion will be available for fresh rescue programs.
"I think Europe has done its part," European Central Bank board member Joerg Asmussen told the Wall Street Journal over the weekend.
"Now you would expect other IMF shareholders to come forward and make their contributions to increasing IMF resources."
Benchmark yields on 10-Year Spanish government bonds rose above 6% Monday morning – a level breached last week for the first time since December.
"After three months that were calmer than expected, the euro crisis is back," says Holger Schmieding, London-based chief economist at Berenberg Bank.
"The speed of the recent surge in yields has elements of a renewed market panic."
Spain is due to auction 2-Year and 10-Year bonds this Thursday.
The ECB "should step up purchases of [government] bonds" said Jaime Garcia-Legaz, a deputy minister in Spain's Economics Ministry, speaking last week.
The ECB began buying distressed government debt on the secondary market in 2010 under its Securities Markets Program. It reactivated the SMP last August when Spanish and Italian yields spiked.
Spanish 10-Year bond yields hit 6.7% last November – while Italian 10-Year yields breached 7%.
Here in the UK, economic growth will be only 0.4% this year – half the official projected rate used by the government – according to a report published Monday by the Ernst & Young Item Club, a forecasting arm of the accountancy firm.
The report cites "corporate cash piles" worth an estimated 50% of GDP as one reason the economy is expected to "stall" in 2012.
"Business investment has picked up nicely in the US but UK companies remain extremely risk averse," says Peter Spencer, chief economic advisor to the Item Club.
"[This] is sapping strength from the economy...until these companies stop stashing the cash and start increasing levels of investment and dividends, the economy will remain on the critical list."
Over in New York, the so-called speculative net long position of gold futures and options traders on the Comex – measured as the difference between bullish and bearish contracts – fell for the second week running in the week ended last Tuesday.
The spec net long dropped 3.9%, Commodity Futures Trading Commission data published late Friday show.
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.