Gold consolidates near $1,210

London: Gold held near $1,210 (Dh4,443) an ounce in Europe yesterday, consolidating after rising one per cent in the previous session on the back of resurgent fears over euro zone debt levels, but a recovery in other assets capped gains.

Spot gold was bid at $1,211.65 an ounce at 0948 GMT, against $1,210.65 late in New York on Tuesday. US gold futures for August delivery ease $1.10 an ounce to $1,212.40.

The precious metal rose more than one per cent on Tuesday after a downgrade of Portugal's debt rating by Moody's brought concern over euro zone sovereign debt back into the spotlight, but it is struggling to build on those gains as risk appetite recovers.

"Appetite for other commodities and assets like equities is better. Gold is going to suffer as we see a return to calmer markets," said Credit Agricole analyst Robin Bhar.

"Without the Moody's downgrade of Portugal yesterday, we wouldn't be up at these levels. You have got to be frightened to want to be long of gold, and we don't have that factor," he added.

"But we still have uncertainties. There are still worries about debt, about currency devaluation, about inflation becoming higher. That is all supportive of this notion of there being a fairly solid floor for gold."

From a technical perspective, gold has established support just below $1,200 an ounce. Analysts who study charts of past price moves to determine the future direction of trade are cautiously optimistic its correction may be over.

"Intraday charts appear to be forming a small basing pattern, and the recovery through the $1,215/18 area suggests that the downtrend from the June peak has stabilised," said Barclays Capital in a note.

"The risk is now for a choppy move higher towards $1,225/27. However, in the least, a recovery above $1,235 is needed to suggest that gold is primed to post new 2010 highs."

In India, the world's main consumer of gold, demand was muted as international spot prices rose, with dealers reporting buying interest had waned after rising on a price dip below $1,200 an ounce.

"I have plenty of orders in between $1,185-1,195 [an ounce]," said a dealer with a private bank in Mumbai.

Among other precious metals, silver was flat at $18.20. The gold-silver ratio — how many ounces of silver are needed to buy an ounce of gold, hit a two-week low of 66.5 on Tuesday as silver outperformed gold in a rising market.

Uncertainties