Spot market prices for buying gold traded above $1,730 an ounce throughout Tuesday morning in London, up 1% for the week so far, while the euro also held onto gains made yesterday despite news that a second ratings agency this year has downgraded France.
Gold rose by more than $20 during Monday's trading, following reports that a deal may be done between US politicians on the so-called fiscal cliff.
"People are feeling a bit at ease about the budget talks in Congress," says Yuichi Ikemizu at Standard Bank in Tokyo.
"But gold is in a tight range between $1,700 and $1,740 until we see a result of the talks at the year end, as the 'fiscal cliff' is the focus of the market."
Silver meantime traded around $33.20 an ounce this morning, up more than 3% from last week's close.
Most European stock markets ticked lower this morning, with the exception of Germany's DAX, while commodities were broadly flat.
Moody's last night became the second rating agency this year to downgrade France. Moody's lowered its credit rating for France by one notch, from Aaa to Aa1, while maintaining a negative outlook.
"Moody's is now giving France the same rating as Standard & Poor's," French finance minister Pierre Moscovici said Monday following the downgrade announcement.
"[This rating] has allowed us to live with low interest rates for many months."
Although S&P stripped France of its AAA rating back in January, benchmark yields of 10-Year French governments bonds have fallen, from above 3% to close to 2%.
In its ratings rationale, Moody's cites "sustained loss of competitiveness" and "deteriorating economic prospects" as reasons behind the decision.
In addition, Moody's argues that France's membership of the euro and therefore its lack of monetary sovereignty could make it more difficult to deal with a rise in borrowing costs.
"While the French government's debt service costs have been largely contained to date, Moody's would not expect this to remain the case in the event of a further shock," a statement from the ratings agency said.
"A rise in debt service costs would further increase the pressure on the finances of the French government, which, unlike other non-Euro area sovereigns that carry similarly high ratings, does not have access to a national central bank that could assist with the financing of its debt in the event of a market disruption."
Eurozone finance ministers meantime meet in Brussels today, where they will discuss whether to approve payment of the next installment of bailout money for Greece. If they agree, national parliaments will then vote on the matter.
The Eurogroup is also expected to discuss policies aimed at improving Greece's debt sustainability. Policies reportedly under discussion include cutting interest rates in loans to Greece and extending the time for repaying loans.