Spot gold prices dropped back towards the London close on Monday, giving back all of the day's gains to end just north of the PM Fix at $662.59 per ounce.
The move came on the back of fresh Dollar strength that showed up despite stronger-than-expected numbers out of Europe.
Germany's ZEW sentiment index and trade balance both beat consensus forecasts by a huge margin.
But by the end-of-play in London's dealing rooms, the Euro was back at $1.3454 – unchanged for the day versus the Dollar. So too was gold.
"The Dollar is picking up a little steam, and that's putting pressure on the gold market," reckons Leonard Kaplan, president of Prospector Asset Management in Illinois.
"We're beginning to see a global movement toward higher interest rates," he added, "and that generally hurts gold."
But Tuesday gave little sign of higher interest rates capping speculative excess in the world's major stock markets.
The Organization for Economic Co-Operation & Development (OECD) this morning issued a report saying that the global boom in private equity buy-outs of listed stocks is being driven by cheap money resulting from China's fixed-currency peg.
"The recycling of this [fixed-exchange] money is an integral part of the arbitrage opportunity that is driving the private equity boom," says the OECD report.
"Easily the main contribution to the measure of global liquidity in 2006 is Chinese foreign exchange market intervention."
(For the full story on China's role in global liquidity, keep reading here...)
Meantime in London, investors were told by a leading commodity fund manager that they'd be "crazy" not to hold real assets in their portfolio right now.
"It's absurd to imagine that with the enormous amount of infrastructure going on, whether that be railroads or roads or power stations or subways or airports, this is other than a revolution in terms of demand," said Ian Henderson, fund manager of J.P.Morgan's Natural Resources Fund, in a Reuters interview.
His fund holds one-third of its money in base metals and related stocks, with energy accounting for one quarter. Allocation is currently weighted 27.5% to gold and precious metals investments.
"For mineral producers," Henderson went on, "the current situation with the arrival of China, India and other emerging markets as major commodity consumers sitting down to the table can be likened to a hostess having prepared a dinner for eight having a further eight guests arrive for whom no food has been bought or prepared."