The Spot Gold Price recovered two-thirds of this week's 5% losses early Thursday, trading back above $925 an ounce as the surge in world stock markets faded.
By lunchtime in London, the FTSE100 index of UK shares traded 1.1% lower to come within 50 points of a new 6-year low.
US crude oil meantime jumped to reverse much of its sharp losses above $43 per barrel, while the European single currency rose back towards the 3-week high vs. the Dollar it had hit overnight at $1.2850.
For French, German and Italian investors Ready to Buy Gold today, the price held below €714 an ounce – some 10% below last month's record highs, but 11% higher for 2009 so far.
"Investor demand for gold is there until we see a sustained rally in equities," says one analyst quoted by Reuters today.
"The inability of the equity markets to build on gains created a climate conducive to higher Gold Prices," agrees James Steel at HSBC, pointing to Wednesday's 1.6% gain, "as risk-averse buyers moved cautiously back into bullion."
Over on the bond market on Thursday – where US Treasuries held steady despite fresh concerns that China's shrinking export sales means it can't continue to fund America's fiscal deficit – 10-year UK gilt yields slid below 3.0% for the first time in history as bond prices rose.
The move came after the Bank of England began buying gilts – so-called "quantitative easing" – on Wednesday.
"So far, so good," reckons John Wraith, head of UK interest-rate products at RBC Capital Markets, speaking to the Financial Times.
"The UK bond market has really moved as a result of the Bank's quantitative easing. We have seen yields fall by 50 basis points since the announcement last Thursday."
Yesterday's auction of cash in return for gilts – effectively funding the UK's fiscal deficit with freshly-created money – drew bids for 5 times the £2 billion available.
Today the Gold Price in Sterling undid the week's earlier drop, re-touching £666 an ounce to stand 11% higher for 2009 to date.
"Faced with the double whammy of deflation and slumping exports, all policymakers want a weaker exchange rate," notes Steven Barrow for Standard Bank's daily forex comment.
"The problem is that [currency-to-currency] not everyone can have a weaker exchange rate. The need for global policymaking togetherness would seem to rule out beggar-thy-neighbor competitive devaluations...[but] the Swiss National Bank announces its monetary policy update today. It has made no secret of its desire for a weaker currency."
Already charging interest of just 0.5% for Swiss Francs – the anti-inflationary stalwart of "hard money" investors during the 1970s – the SNB today cut its key interest rate to 0.25%, citing "the risk of negative inflation."
Aiming to "forcefully relax" its policy, the SNB also went a step further than the US and UK quantitative easing by announcing it will sell Francs on the forex market, buying foreign currencies to depress the value of its own money.
The Franc promptly lost 3% to the Euro on the news, as traders set about doing the SNB's work for it.
Over on the supply side of the gold market, meantime, South Africa reported on Thursday a near-9% drop in gold production for January from a year earlier.
Jan. 2008 had already seen South African Gold Mining output sink 16.5% after a power outage imposed by struggling state utility Eskom.
Formerly the world's No.1 gold producer, South Africa has now slipped into third place – well behind China and the United States – as its annual output has fallen in half over the last decade.