Although silver rallied, the price of gold held onto an earlier drop Tuesday morning in London, retreating from last week's closing levels as UK and US traders returned from national holidays.
Gold edged down to $1,380 per ounce, half-a-percent below Friday, even as the US Dollar slipped on the currency market.
Silver recovered to $22.33 per ounce, just 10¢ shy of last week's finish.
World stock markets rose sharply meantime, adding 1.7% to London's FTSE100. Major government bonds fell, nudging interest rates higher.
"The business cycle puts gold in an uncomfortable position," reckons Bank of America analyst Michael Widmer in London. "Higher growth, rise in nominal [bond] yields and subdued inflationary pressure have all limited investor buying."
UBS precious metals team agrees, saying that 2013's "strong rally in equities...has presented an obstacle" for the gold price. Because the metal now faces competition for investment capital.
However, "some moderation of the trend of rotating out of gold in favor of equities may be in store," the Swiss bank's bullion analysts said in a note Friday. Because "much of this [rotation] has already been done."
One major route to gold-price exposure, exchange-traded gold trusts have lost 443 tonnes of gold so far in 2013 – a drop of nearly one fifth – says a note from Barclays Capital. But they still hold 109 tonnes of "cash negative" positions, it warns.
With those investors looking to cut their losses on gold, "prices continue to be exposed to downside risk in the near term," says BarCap. "But once this metal is flushed out, we believe prices are more likely to stabilize."
"Some people still have faith in gold," says Yvonne Wang at metals consultancy Beijing Antaike, speaking to Bloomberg on Monday about the latest central-bank gold reserves data from the International Monetary Fund.
As a group, central banks added more than 30 tonnes of gold to their foreign currency reserves in April, the IMF says.
More than half that sum came from commercial banks in Turkey putting physical gold on deposit at the central bank in Ankara.
Russia led actual purchases, growing its central bank gold bullion holdings by 0.8% to 989 tonnes.
"I think [this] news will help to steady the gold price decline," says Wang.
End of business Tuesday will mark expiry and settlement for the June contract in US gold futures.
The heaviest interest is concentrated at $1400 per ounce, so "it is no surprise to see the market within touching distance of that level," says David Govett at precious metals broker Marex.
"If we rally at all today, expect some initial selling ahead of this, but if we manage to break through, then some short covering" – forcing a spike in prices as bearish traders rush to close their positions.
Betting against gold prices by hedge funds and other speculators through US futures ended last Tuesday equal to nearly 340 tonnes – the highest level in at least 20 years – according to data released Friday.
Subtracting those bearish bets from the bullish contracts held by speculative traders, the group last week cut their "net long" position on gold for the 3rd week running.
That's "the longest streak of liquidations we've seen since October last year," says Standard Bank's analysis.
Meantime in Asia, "We are not seeing any signs of slowing down," said one Singapore dealer to Reuters this morning.
"People are still thinking it is a good price to go in at."
After India tightened controls on gold imports at the start of this month, gold dealers in Hyderabad have now "run out" of gold coins, according to the Deccan Chronicle.
India's government yesterday moved to try and curb interest in gold still further, blocking owners of exchange-traded gold funds (ETFs) from raising loans against those shares through Indian banks.
Neighboring Pakistan, in contrast, may cut its import tax on gold according to the Business Recorder. Because the 1% duty imposed six years ago has now been blamed for increased smuggling and lower bullion-import revenues.
Gold smuggling to India could rise by 40% to 140 tonnes in 2013 reckons the Thomson Reuters GFMS consultancy. That would account for nearly one ounce in every six sold to consumers in the world's heaviest gold buying nation.