Gold steadied Thursday after falling to a four-month low in the previous session, as an uptick in the euro after Spain moved to clean up its banks and Europe's bailout fund approved a key payment to Greece took some pressure off prices.
While the Eurozone debt crisis is continuing to simmer, moves to address some of its problems are improving appetite for assets seen as higher risk, like stocks and commodities, as well as the single currency.
Spot gold was up 0.1 per cent at $1,591.96 an ounce (Dh5,847.51) at 1147 GMT, after falling as low as $1,579.30 an ounce on Wednesday, its weakest since early January. US gold futures for June delivery were down $1.50 an ounce at $1,592.70.
Prices have fallen 3 per cent this week as concerns over the Eurozone debt crisis pressured the euro and other risk assets. While investors bought gold as a haven from risk during the debt crisis last year, it is now trading more in line with its traditional drivers, the dollar and other commodities.
"Gold seems to be currently trading more as a risky asset than a safe haven," Anne-Laure Tremblay, an analyst at BNP Paribas, said. "While the US dollar has gained on the back of higher risk aversion, gold was sold off.
"The decline is likely a consequence of liquidation in the paper market rather than lack of interest on the physical side."
The euro edged off a three-and-a-half month low against the dollar Thursday, snapping eight sessions of losses, as stress in Spanish debt markets abated and after Greece secured funds needed for bond repayments, tempering the threat of a Greek insolvency and possible euro exit.