US dollar gold prices fell to $1,573 an ounce Tuesday morning in London – a few dollars above last week's low – as stocks and commodities also traded lower, while US Treasuries were flat and German bunds fell after Germany's credit rating was placed on negative outlook.
Silver prices briefly dipped below $27 per ounce – 1.2% below where they began the week.
On the currency markets, the euro briefly dropped below $1.21 for the second day in a row, while euro gold prices hovered around €1300 per ounce – 3.2% off its six-month high. The gold price in euros has gained 8% since the middle of May.
"Thanks to the euro's depreciation vis-a-vis the US dollar, gold in euro terms has been making gains for some time now," says a note from Commerzbank.
Ratings agency Moody's said last night that it is placing three Aaa-rated euro-zone sovereigns, Germany, Luxembourg and the Netherlands, on negative outlook.
"There is an increasing likelihood that greater collective support for other euro area sovereigns, most notably Spain and Italy, will be required," said a statement from Moody's.
"Given the greater ability to absorb the costs associated with this support, this burden will likely fall most heavily on more highly rated member states if the euro area is to be preserved in its current form."
The German finance ministry responding by insisting that "Germany will, through solid economic and financial policy, defend its 'safe haven' status and continue to maintain its responsible anchor role in the Eurozone."
Moody's also said it will "assess the implications" of recent euro-zone developments for Austria and France, whose Aaa ratings the agency put on negative outlook in February.
"In all large industrialized countries, AAA is an endangered species," says Joerg Kraemer, chief economist at Commerzbank.
"They're all under fire."
Spain and Italy meantime both announced short-selling bans on Monday following heavy stock market losses. Spain's regulator CMNV has banned short-selling – by which traders bet on a fall in prices – on all Spanish securities for three months, Reuters reports. Italy's Consob has banned the short-selling of 29 banking and insurance stocks for one week.
Spain's Ibex stock index saw the biggest loss of major European bourses in Tuesday morning's trading, falling 2.7% by lunchtime, while Italy's FTSE MIB index was down 1.3%.
Both nations introduced short-selling bans last August, which also saw similar bans implemented by Belgium and France.