London: Gold slipped more than 1 per cent in Europe on Tuesday as a recovery in equity markets suggested investors' fear of risk was easing, denting interest in the metal as a safe store of value.
Buying and selling of gold-backed exchange-traded funds remained subdued, with the largest, New York's SPDR Gold Trust, reporting no movement in inventories on Monday.
Spot gold fell to $913.60/$915.60 an ounce at 1240 GMT from $920.95 late in New York on Monday.
Standard Bank analyst Walter de Wet said a move higher yesterday in equities, oil and other commodities showed "people are slightly more optimistic on the real economy".
World stocks rose after three consecutive days of declines knocked them to six-year lows, with the MSCI world equity index climbing 0.7 per cent.
European shares benefited from a memo from Citigroup's chief executive, containing reassuring comments about the bank's performance, which helped calm fears over the embattled financial sector.
Among other commodities, oil held above $47 a barrel as dealers weighed up Opec's decision on output this weekend, while the base metals also ticked up.
The dollar fell against a basket of currencies yesterday, retracing the previous day's gains.
Gold is typically bought as an alternative investment to the dollar and until recently moved in the opposite direction to it. However, the link between the two assets has recently weakened, with both now reacting to risk aversion.
Analysts say the bleak global economic outlook and currency market volatility will support gold prices.
Plunging equity markets and inflation fears pushed the metal to an 11-month high above $1,000 an ounce last month.
Swiss bank UBS - using an econometric model based on volatility in inflation levels, a dollar index and inflation as measured by US CPI - said it sees an upside limit for gold of $2,500 an ounce and a floor of $500.
But slack jewellery buying as prices rise is likely to cap gains, as will a surge in scrap supply.
Gold demand in India was quiet on Tuesday.
