The wholesale price of gold recovered all this week's previous 2.1% drop by Thursday morning in London, trading back at $1,288 before slipping $5 per ounce as the U.S. dollar steadied on the currency market.
World stock markets also stood higher for the day, and bond yields fell as prices rose, after both the current and next U.S. Fed chiefs said money-printing and zero interest rates "[have] more work to do" yet.
"Gold's price is closely tied to investor sentiment," write John Hathaway and Doug Groh, co-managers of the Tocqueville Gold mining-stock fund.
"[So] the current run-up of the equity market has turned investors' attention to stocks and away from commodities. [But] when commodity prices are advancing as a result of inflation or increased demand, investors often gravitate to gold, and we expect that to be the case as a result of accommodative monetary policies."
U.S. consumer price inflation was last seen in September at 1.2% per year, near its lowest since the mid-1960s.
The U.S. stock market's 23% rise so far in 2013 matches the 23% decline in gold prices since January.
Wholesale gold bullion is now showing a strongly negative correlation with the U.S. dollar's trade-weighted index on the currency markets, moving higher as the dollar falls and vice versa, says a note from Swiss bank and London market-maker UBS.
Hitting a 4-month low of -0.74 last week, the daily correlation of gold with the USD index "suggests gold will likely continue to look closely to dollar moves for direction," explains UBS.
But "choppy price action" is likely to predominate it says, "given the persistent focus on U.S. economic data and headline risks coming from Fed member comments."
Fed vice-chair Janet Yellen, defending her nomination as the U.S. Federal Reserve's next chief later today, will tell lawmakers "I believe the Federal Reserve has made significant progress toward its goals," according to prepared remarks released Wednesday
"But [the Fed] has more work to do."
"We're missing on both" parts of the Fed's dual mandate, current chairman Ben Bernanke said at an event Wednesday to mark 100 years of the US central bank, pointing to weak jobs growth and weak price inflation below the central bank's 2.0% target.
"We need a stronger, more rapidly moving economy."
Back in the gold market Thursday, new data from the World Gold Council showed the first spring-to-summer drop in world gold demand since 2007.
Gold demand from the world's former No.1 consumer, India, fell to its lowest Q3 level since 2005 at 148 tonnes, says the market-development group's new Gold Demand Trends, down by one third from July-Sept. last year.
New world No.1 China saw its gold demand rise by 18% year on year.
Today, reports Reuters, "Supplies coming through legal channels [to India] are very expensive," said one Mumbai dealer.
"Buyers need to pay more than $100 premium over London prices" – the world benchmark for physical gold bullion.
China's gold premiums meantime held firm today at $4.50 per ounce in Shanghai.
"Looking to the fourth quarter," says the World Gold Council's new report, pointing to typical stockpiling ahead of the strong Chinese New Year, "anecdotal reports are of cautious optimism among banks and retailers.
"Investment should nonetheless improve during the traditionally strong [year-end] period."
"Should we see a pick-up in [Asian] physical demand," says Standard Bank analysis today, "we would expect gold to rise above $1,300. First because ETF liquidation [by Western funds] is likely to be better matched by demand from Asia, and second, the futures market is likely to short-cover."