Spot market old prices rallied to $1781 per ounce ahead of Wednesday's US session, recovering from slight losses earlier in the day to stay in line with recent trading, while stock markets were broadly flat and the Euro reversed earlier gains, as analysts speculated on when and whether Spain will request a bailout.
Silver prices rose briefly above $34.90 an ounce before easing back, while other commodity prices fell and UK and German bonds gained.
"We do not, at this stage, believe that another significant up move [for gold], that is to say to the $1900 level, will be seen before further consolidation has occurred," says Axel Rudolph, senior technical analyst at Commerzbank.
"The $1815 area may be reached, though."
Western households grew more bullish towards gold last month, according to Gold Investor Index data published by online gold and silver exchange BullionVault Wednesday.
The Gold Investor Index, which tracks the balance between gold buyers and sellers on BullionVault's exchange, rose to 52.5 last month, up from 52.1 in August. A figure above 50 indicates more individual buyers than sellers during the month.
September saw the European Central Bank unveil its unlimited sovereign bond buying program, Outright Monetary Transactions, while the US Federal Reserve announced an open-ended third round of quantitative easing. The Eurozone crisis also returned to the headlines.
"Private households are continuing to join the bull market," says BullionVault head of research Adrian Ash.
"But the response by retail investors to both QE3 and the latest phase of the Eurozone crisis is more measured...than the recent price action alone might suggest."
Gold prices are up nearly $100 an ounce since the start of September, while the US Dollar Index, which measures the Dollar's strength against a basket of other currencies, has fallen more than 2% since August 31, the day Fed chairman Ben Bernanke hinted at QE3 during a speech at the annual Jackson Hole conference.
"Gold is just another currency," well-known investor and newsletter publisher Dennis Gartman told CNBC Tuesday.
"It is doing well in other currency terms...I am not a gold bug. I don't think the world is coming to an end, but I think everyone needs to own some gold."
Dollar gold prices hit new 2012 spot market high earlier this week, touching $1791 per ounce, but have been trading in a much narrower range over the last fortnight than they were over the four previous weeks.
"We are going through a bit of a consolidation period," says Jeremy Friesen, commodity strategist at Societe Generale.
"My suspicion is that we'll get more monetary policy responses from other central banks as the Fed program kicks off and the ECB program starts, probably by the end of this month. That's bullish for commodities like gold."
"There has been no further leg up in financial markets [this week]," adds a note from Barclays.
"[This] reflects ongoing uncertainty about the timing of Spain's formal request for an official [bailout] program and concerns about global growth."
News agency Reuters reported yesterday that Spain could be ready to request a bailout, which would pave the way for the European Bank to buy its bonds, as early as the weekend, but this was later denied by Spanish prime minister Mariano Rajoy.
"If a news agency reports that we'll ask for aid this weekend, there can only be two explanations," Rajoy told reporters Tuesday.
"That the agency is right, and knows more than I do, which is possible, or that they are not right...but, if it helps, and you accept that what I say is more important than this leak, I say no [we won't ask for a bailout this weekend]."
"The Spanish government seems to want to have its cake and eat it," says Standard Bank analyst Steve Barrow, noting that Spain would like the ECB to buy its bonds on the open market, helping to reduce borrowing costs, but does not want to accept the strict conditionality that could come with a rescue package.
Barrow adds that Spain may actually be able to reap the benefits of a bailout while avoiding some of the drawbacks.
"Spain can opt for what we'd call bailout-lite," he says, referring to a scenario whereby Spain enters into a more precautionary arrangement with lower conditionality but which would still be sufficient for the ECB to activate its Outright Monetary Transactions program.
"[However] the country's poor economic and budgetary situation suggests to us that it will, indeed, be sucked towards a full bailout in the future."
Elsewhere in Europe, Germany's services sector fell into contraction last month, September PMI data show, while the sector for Eurozone as whole continued to contract. Britain's services sector continued to expand, according to PMI data, but at a slower rate, with the PMI dropping from 53.7 in August to 52.2.
"Rather than clearing, the cloud of uncertainty hanging over business investment and spending got notably darker in September," says Chris Williamson, chief economist at Markit, which produces the PMIs.
Retail sales in the Eurozone meantime rose slightly in August, data released this morning show, rising 0.1%.
China, the world's second-biggest gold buying nation last year, saw slowing activity in its services sectors during August, according to purchasing managers index data published Wednesday. China's non-manufacturing PMI, published by China Federation of Logistics and Purchasing, fell to 53.7, down from 56.3 in July. A figure above 50 indicates sector expansion.
