Gold fell further in London dealing on Tuesday, extending its discount to 3.2% from Friday's record high against the US Dollar as world stock markets and raw materials bounced sharply.

The US Dollar eased back, losing 1% from yesterday's four-year high to the Euro.

Government bonds were little changed.

The Greek government today received the first €20 billion ($25bn) of its €110bn European rescue package.

Athens has an €8.1bn bond repayment due on Wednesday.

"Gold still looks vulnerable to more sell-offs, as stocks and the Euro look capable of rebounding," says one Asian trader in a note.

"Support at low $1210s will be given stern test."

"Gold seems to be losing momentum," agrees Walter de Wet at Standard Bank, adding that the metal "failed to rally yesterday, even though risk metrics such as the VIX jumped higher and other commodities pushed lower."

The first two weeks of May saw US crude oil contracts drop almost 19%. The Gold Price added 5.8%.

"We believe that gold's downside is better protected than most metals," de Wet continues, "but still we'd look for a further correction lower before we'd see value in adding new longs."

WTI crude oil contracts today jumped back above $70 per barrel. The Gold Price in Dollars slipped to $1208 an ounce.

Silver Prices unwound almost all of last week's 8.0% jump, dipping below $18.70 an ounce.

"It is evident that the search for safe havens is driving investors to gold," writes Wolfgang Wrzesniok-Rossbach at German refining group Heraeus in Hanau.

"New highs in ETF [holdings], and a strong demand for physical gold in the form of investment bars point to such a development...especially for Germany [where] buyers of investment bars are again having to accept waiting periods for delivery."

Heraeus says it has increased Gold Bar production to keep "waiting periods manageable".

"Incidentally, enough feed continues to be available as supplies of scrap gold in Europe, as well as Asia, are at robust levels thanks to the high price," says Wrzesniok-Rossbach.

On the political front, meantime, "It is now very important to reinforce confidence in the Euro economy," said EU economy commissioner Olli Rehn at a meeting of European finance ministers today in Brussels, designed to set strict "austerity budget" targets for the 27-member union.

But after the European Central Bank announced buying its first €16.5bn of Greek debt on Monday, "The ECB is now purchasing the government debt of sovereigns whose solvency is in question," notes economist David Mackie at J.P.Morgan in London.

"Neither the Bank of England nor the Federal Reserve did that" with their Quantitative Easing programs.

Here in the UK, new data showed consumer price inflation rising sharply last month and hitting a 19-year high on the Retail Price Index (excl. mortgage interest).

"The Bank of England still looks unlikely to raise interest rates anytime soon," says Howard Archer of IHS Global Insight, because the government debt burden – and the stuttering private-sector recovery – look to require continued cheap money.

The Gold Price in Sterling dropped 4.1% from Monday's all-time intraday peak, dipping through £835 an ounce – a level first broken on Wednesday last week.

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