Gold retreated below $645 per ounce as the European session began today, giving back its late gains in New York above $648.

Against Sterling, gold pulled back beneath £334 – down 0.5% from the top seen early in Asia.

French and German investors began the day with gold trading below €492, a little more than €2 off the top.

"Gold-Yen is reaching [a] low," reckons Jonathan Barratt of Commodity Broking Services in Sydney, "and you would probably expect to see a little bit of a bounce in it."

The Yen price of gold pulled back 1% to ¥75,000 as the Japanese currency rose during Tokyo trade today.

"You might start to get a little bit of investor support at the current level," says Barratt.

"Our expectations would be a sell-off tonight to $640 and then from there I would love to buy gold."

On the foreign exchanges, Sterling spiked to $1.935 overnight but gave it all back to $1.925 as the London session drew near.

Currency analysts now say a hike in UK rates by the Bank of England on Thursday looks unlikely after the stock market sell-off. Yesterday also saw weak Purchasing Manager Index data, too.

The European Central Bank, on the other hand, is still expected to hike its rates tomorrow. But the Euro has also fallen versus the Dollar today, and slipped back versus the Yen.

"The markets are jittery," said Seiichiro Muta, director of foreign exchange at UBS in Tokyo to Bloomberg earlier.

"The retreat in Japanese shares [down 0.5% today] is scaring some investors into becoming risk averse. There's buying of the Yen." (Click here to read more about the Yen carry-trade and its impact on global markets...)

Meantime in the oil market, crude prices rose near to $61 early today on forecasts of a cold snap in the north-eastern United States.

Latest figures on US gasoline and distillate inventories are due from the Energy Department later today.

"If we get some numbers suggesting crude inventories are on a draw down again then we could see gold regain itself back up to that important psychological $650 level," reckons one gold analyst.

And more bullishness for gold comes from Mark Hulbert, editor of the renowned Hulbert's Financial Digest.

He notes that short-term gold timing newsletters now advise cutting all exposure to gold. That put Hulbert's Gold Newsletter Sentiment Index at 0% by the US close last night.

"This represents a huge rush to the exits on the part of the gold timing newsletters I monitor," he says. "As recently as February 16th, just 11 trading sessions earlier, the index stood at 75%."

Hulbert advises that investors note the "contrarian" nature of his gold-timing index, and look for a sudden rise in the metal.

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