Gold erased an overnight rally in London on Wednesday, dropping back to $1092 an ounce as global stock markets fell yet again.
Commodities, the Dollar and government bonds were all little changed ahead of today's monetary policy decision from the US Federal Reserve.
Currently holding its key interest rate almost 2.5% below the pace of domestic price inflation, the Fed is widely expected to make no changes when it speaks at 19:15 GMT today.
"The Euro has not been lower than $1.40 since July 2009 but is testing that level again this morning," says a note from the precious-metals division of Japanese conglomerate Mitsui.
"A break through here is likely to see deeper liquidation in the metals."
"The risk is for continued liquidation in both Gold and silver," agrees a note from bullion bank Scotia Mocatta.
Typically moving together against the US Dollar, gold's daily correlation with movements in the Euro has risen to +0.75 from the 10-year average of +0.52 since the start of last month.
"[But] If a stronger Dollar triggers a more meaningful sell-off in equities," says the latest Bullion Weekly from London service TheBullionDesk, "we feel it will not be long before investors move out of equities and into Gold – leading to another instance where the Dollar and gold rise in tandem."
Gold and the US Dollar moved higher together between Oct. '08 and March '09, while global stock markets lost almost half their value to reach multi-year lows.
"At the core, [the Eurozone] is a healthy economy and there is no problem with the Euro currency whatsoever," said European Central Bank executive Axel Weber to CNBC from the World Economic Forum in Davos, Switzerland this morning.
"I expect the Euro to be there forever."
Forecasting GDP growth of 0.5% to 1.0% across the Eurozone in 2010, "This year's discussion will [focus on] phasing out the exceptional measures taken to support liquidity, one by one," said Weber, who is also president of Germany's Bundesbank.
"We're still very early in the recovery," notes Paul Klug of ING Investment Management Asia Pacific.
Polling 3,700 high net worth investors across the region in December, his bank found that gold beat stock-market shares as the preferred inflation hedge for Asian wealth.
"It's a perfectly rational response if you think inflation is going to pick up," says Krug.
"Shift more of your portfolio to commodities and Gold. That has traditionally been the smart thing to do."
New data today showed inflation in Australian consumer prices rising faster than expected at the tail-end of 2009, but New Year sales cut shop prices sharply across Germany.
Retail sales in the UK more than reversed Dec.'s improvement, the CBI's distributive trends survey said.
Iceland's central bank trimmed its key interest rate to 9.5%.
Forecasting "smooth growth" for the world's fastest-expanding economy in 2010, China's No.2 central banker, Zhu Min, told the WEF in Davos today that the Beijing authorities want to be "very careful managers of inflation.
"Inflation is not there yet, but expectations are forming."
Meantime in the gold market – where Chinese households became the world's No.1 buyers in 2009 – "There is still very good physical demand for Gold ahead of [early Feb's] Chinese New Year," reports global dealer Standard Bank.
"It makes a change for there not to be an unfolding crisis as we go into [the Davos] forum this year," announced a CNBC anchorman from the Swiss ski resort on Wednesday morning.
Entitled 'Rethink, Redesign, Rebuild', this week's 2010 meeting of political, business and finance leaders will hear the International Monetary Fund warn that Western banks need much more cash to support their balance-sheets, despite raising over $1 trillion from the stock market – more than the write-downs triggered to date by the global financial crisis.
Government support and guarantees to financial institutions worldwide now total some $14 trillion, according to Bank of England estimates – equal to 25% of global economic output in 2009.