Wholesale-market prices to buy gold retreated Thursday morning in London, ticking back towards yesterday's one-week low at $1,653 per ounce as world stock markets also fell.
Prices for silver bullion held steadier, trading just 10 cents below Monday's start at $30.70 per ounce.
The US dollar ticked lower against the euro and sterling on the currency market.
Iron ore sank yet again, hitting a 3-year low and taking its fall over the last six months to 37%.
"Bullion trading is still quite light with the market awaiting [Friday's] Jackson Hole symposium," says one London market-maker in a note.
"Players on the precious metal markets already appear to be exercising restraint ahead of the annual [central-banking] conference this weekend," agrees Commerzbank's commodities team in Frankfurt.
But "the currently very brisk levels of investment demand should prevent any serious fall in gold prices," they add.
Demand to buy gold and other precious metals bars "continues to be high," confirms German refining group Heraeus, "and we do not expect a decline in interest in the next few days."
Investors using exchange-traded funds to buy gold exposure again increased their position on Wednesday, according to global data from Bloomberg, taking this run to a seventh day and extending August's growth in physical backing to 65 tonnes – a rise of nearly 3% for the month.
The #1 investor in the world's largest gold ETF – the SPDR Gold Trust – John Paulson this week called his Gold Fund "the worst performing fund this year" amongst his hedge-fund offerings to clients.
Down 22% by value since the start of the year, "If you like the gold miner thesis, this is something that should encourage you to keep your position," says Spencer Boggess, Bank of America's director of hedge-fund investments, also speaking on a conference call with Paulson on Tuesday.
Besides holding 12% of the $65 billion SPDR, the Paulson Gold Fund holds sizeable stakes in several gold mining companies.
US-traded gold miner stocks have fallen 10.9% so far in 2012, badly lagging the price to buy gold itself – now 5.6% higher for dollar investors.
"In the event of no further stimulus, we'd see gold's fair value at $1660 – up from $1650 in July," says a new report from Walter de Wet at Standard Bank in London today.
"[So] we do not believe that gold is pricing fully further monetary stimulus from the Fed."
Standard Bank's analysts believe that a further $500bn of US quantitative easing would add another $80 per ounce to their "fair value" gold price.
Today in India – the world's #1 consumer market for gold – prices edged back from fresh all-time records as the rupee's exchange rate rallied.
"There is less buying as prices are still high," Reuters quotes Lucknow wholesalers Brijwasi Bullion.
India's post-harvest wedding and festival season is now underway. A traditionally strong period to buy gold it culminates with Diwali – the festival of lights – in early November.
Meantime in Europe – where business and consumer confidence both showed another drop on new data this morning – the government of Italy today sold all of the €4 billion in new 10-year debt it wanted to raise at auction.
Investors demanded an annual yield of 5.82%, down from the near-6.00% achieved at a sale in July.
"I think [that drop] is very much to do with the ECB," says fixed-income analyst Elisabeth Afseth at brokers Investec in London.
"If we hadn't had [rumors of a bond-buying plan], I suspect that both Spanish and Italian yields would have been considerably wider than where they are" compared to German debt.
German Bund yields remained just below zero this morning for investors buying anything up to 3-year debt.