Bullion prices on the wholesale gold market rose back above $1,600 an ounce shortly before Tuesday's US trading, after failing to breach that level in the earlier Asian session, while European stock markets also ticked higher after a quiet morning's trading.
A day earlier, gold briefly rose above $1,600 on Monday following the news that Spain will borrow up to €100 billion to rescue its banks, but along with stocks and the euro gold failed to hold those gains.
Silver prices meantime jumped to $28.94 per ounce, a 1.5% gain on the week so far, while commodity prices reversed earlier losses.
Earlier on Tuesday, Indian dealers reported flat trading, with one citing traditional gold buyers' lack of spare cash.
"Farmers are not buying as it is their sowing time," said Ketan Shroff, director at Pushpak Bullion, speaking to news agency Reuters.
Away from the gold market, Spanish 10-year government bond yields rose to their highest level this month Tuesday morning, breaching 6.6%.
"There's a risk that Spain may be downgraded," reckons Alessandro Giansanti, senior rates strategist at ING in Amsterdam.
"There are still concerns about the seniority of the outstanding government debt after the bailout, and that means if you want to invest in the bond you need a higher risk premium to compensate."
Ratings agency Moody's last week set out a case for a possible Spanish downgrade as a result of any bailout, citing the experience of private sector bondholders who were obliged to take losses in Greece's debt restructuring in March.
"The debts of Euro area sovereigns that are dependent upon funding support from official sources represent noninvestment grade risks," said a Moody's statement released Friday, the day before it was confirmed Spain would seek a rescue deal for its banks.
"Future support – particularly if likely to be needed for a sustained period – would likely be made conditional on loss sharing with private investors or in extremis withdrawn altogether."
Elsewhere in Europe, yields on Italian 10-year bonds hit five-month highs this morning.
"It may be that, given the high rates Italy pays to refinance on markets, they too will need support," said Austrian finance minister Maria Fekter Monday night, although by Tuesday morning Fekter said she sees no sign that Italy will make a bailout request.
Every country in the European Union should agree to have their large banks supervised by a single cross-border supervisor, according to European Commission president Jose Manuel Barroso.
"There is now a much clearer awareness among European member states about the need to go further in terms of integration," said Barroso Monday, in an interview with the Financial Times.