Spot gold prices pulled back to $662 at the PM Fix in London on Tuesday – the highest PM Fix since Wednesday last week, but $3.50 off the day's high so far.

The gold price in Pounds Sterling pulled back faster still from the earlier peak, down 0.6% to £335.30 per ounce.

Gold priced in Euros also gave back the day's gains, dipping to €492.

In the futures market, action had been slow in Tokyo overnight.

"Both the Tokyo futures and gold bullion market lack direction at the moment," according to Tatsuo Kageyama, analyst at Kanetsu Asset Management.

"With turnover in Tokyo thin, it just isn't very active."

The Tocom's benchmark gold futures contract, April '08, put on just ¥6 per gram – a mere 0.2% – to close at the equivalent of $668.49 as the Japanese Yen slipped to a three-month low versus the Dollar on the currency markets.

Despite the ongoing race to debase amongst the world's leading currencies, today brought a wave of negative comment for gold's short-term outlook.

Writing in the Financial Times, John Dizard said that "the Dollar gold price would seem to have decisively broken down, with a trend that appears sustainable for the next several months, probably at least to the end of this year."

Speaking at the 2007 Paydirt Gold Conference in Perth, Australia earlier today, Huw McKay – economist at Westpac Institutional Bank – called the outlook for gold "benign" at best.

"The pricing in real terms will not be charging up to the $1,000 benchmark. But, at the same time, it also will not be diving below $500 on any sustainable basis."

Should gold investors take the recent gold correction quite so to heart?

Looking ahead, "we believe that you're going to have this long secular bull market, which some characterize as a super cycle," said Frank Holmes, CEO of US Global Investors, at the Reuters Global Mining and Steel Summit in New York on Monday.

US Global Investors grew assets under management by 60% last year to $4.53 billion. The firm won this year's Lipper award for best gold fund.

"But we're going to have massive corrections – that's what you have recognize," Holmes went on.

"The volatility of the corrections is what spooks a lot of people. It gets exaggerated by the Dollar, by the forex issues."

The US Dollar's recovery continued to hurt the Euro overnight, holding it near to yesterday's 7-week low below $1.3440.

"There is very little in the way of economic data due ahead of the eagerly awaited revision to US first quarter GDP on 31 May," says Tom Tragett in today's Forex Profit Alert.

First estimated to 1.8%, Q1 economic growth has since been revised lower to 1.3%. Wall Street now expects the true figure – due for release a week on Thursday - to drop to just 0.7%.

"Clearly there is risk here for the US Dollar should this number prove to be even lower than that," says Tragett. "Some forecasters have even suggested that the number might be flat."

Elsewhere Brent crude oil held above $70 per barrel after hitting a 9-month high on Monday, driven higher by fresh violence in Nigeria – the world's fourth-largest oil producing nation.

For physical gold demand, Reuters reports that gold sales in the oil-rich state of Abu Dhabi rose about 10% in volume terms in April.

"Prices stabilized and many people returned to the market," says Tushar Patni, chairman of the Gulf emirate's Gold and Jewellery Group.

"The demand for gold is growing in China," added Ian Cockerill, chief executive officer of Gold Fields, earlier today.

"Look at the new-found wealth in that country and the burgeoning middle classes and their demand for gold. It has been very, very strong despite the higher prices."

Supply-side, meantime, the outlook for global gold mining production continues to weaken.

Paul Burton of the World Gold Council noted at the Paydirt Conference yesterday that "the gold price climbed 24% in 2006 but cash costs by comparison have risen 19% over the same period."

Just this morning, South Africa's NUM mineworkers union demanded a 15% wage increase for staff at Impala Platinum. Wage claims in the gold-mining sector are expected to follow suit.

Newmont Mining, the world's second largest gold mining company, announced today that it's slashing jobs at two of its major Australian operations because of soaring labor and production costs.

"We are conscious of rising costs, we are conscious of skill shortages in this country," said Russell Clark, regional group executive for Australia and Asia.

The two mines accounted for 700,000 ounces of gold last year, but Clark says costs have risen by 45% over the past five years.

"The largest increase is in labor," he told the Tasmanian Mercury, "which has increased by 75%."

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