Gold rose on Thursday, arresting four straight days of declines, although a ratings agency downgrade to Spain's creditworthiness could weigh on the euro and, in turn, restrict gains in the bullion price.
The euro steadied after a drop driven by Standard & Poor's, which cut Spain's sovereign credit rating to BBB-, leaving the euro zone's fourth largest economy just one notch away from speculative territory.
Spot gold rose 0.4 percent on the day to $1,769.74 an ounce by 0955 GMT. The price had fallen by more than 2 percent over the prior four trading days, its longest stretch of declines since June this year.
Gold priced in euros rose for a fourth day in a row to within 1 percent of the record high of 1,386.38 euros an ounce struck on October 1.
"Overnight, after the downgrade of Spain, gold went down but has held up nicely. We have been seeing a bit of demand coming out of the woodwork. It's nothing huge, but it was better than it has been previously and, since Monday, flows of gold scrap have been very, very low," MKS Finance head of trading Afshin Nabavi said.
"Overall, it feels as though we may have found a base for gold at the moment and now we have to try the higher end of the range at $1,775/80," he said.
Gold has risen by 13 percent in 2012 so far, making it one of the best-performing commodities this year, in spite of a lacklustre first half of the year.
Gold has risen by about $215 in 2012, with $165 in gains having materialised in the last two months alone, after the U.S. Federal Reserve indicated, then outlined, its intention to resume buying bonds to prop up the economy.
The failure of the gold price to pierce $1,800 an ounce since then has led to a modest downward correction.
"The path of least resistance for gold appears to be lower, we believe. Institutional investors give the impression of losing enthusiasm for another challenge of gold's USD1,790-1,800/oz price levels," HSBC analyst James Steel said.
"Near-term, traders might want a reduction in long net speculative positions from current high levels before they recommit to gold," he said.
Steel added he believed the underlying bullish case for gold remained intact, given the prospect of loose monetary policy for years to come, ongoing central bank purchases of bullion and demand from key consumers such as China.
In other precious metals, silver rose 0.7 percent to $34.22 an ounce.
The gold/silver ratio, the number of ounces of silver needed to buy one ounce of gold, fell below 52.0, from closer to 52.5 earlier this week, reflecting silver's outperformance relative to gold
So far in 2012, silver has been the top performing precious metal, with a gain of nearly 24 percent, compared with a 20 percent rise in runner-up platinum, a 13 percent rally in gold and a 0.3 percent loss in palladium.
Platinum rose 0.4 percent to $1,673.75 an ounce. Platinum's discount to gold has risen closer to $100 this week, from a one-month low closer to $75 last week.
The price of platinum has risen by 20 percent in the space of two months after a spate of strikes in South Africa shuttered much of the country's production capacity and left nearly 50 dead after clashes between miners and police turned violent.
Nearly 80 percent of the world's platinum comes from South Africa.
A Reuters poll on Wednesday shows analysts are less optimistic about the price prospects for platinum this year and next, even with the constraints on supply.
The fragility of demand from the car industry, particularly in Europe, poses enough of a threat to the market balance that analysts now expect a median platinum price of $1,559.50 in 2012, compared with forecasts three months ago for an average price of $1,572, according to the survey.
Palladium was up 0.5 percent on the day at $649.72 an ounce.