Gold prices Thursday appeared to halt the previous session's big plunge, though prospects that they were carving a bottom defied the extent of damage precious metals prices suffered.

On Wednesday gold prices tumbled below their 200-day moving average -- a sign that more declines were coming -- to a level not seen since mid-July.

The bottom also fell out from under other precious metals. Silver plunged 7.4 percent and palladium dropped 6.7 percent. Platinum fell to a two-year low.

Another signal of possible further decline came from the role that eurozone concerns played in Wednesday's stock market selloff that hammered equities around the world.

Fitch downgraded five European banks, underscoring the continent's tenuous financial stability, as well as a consensus that Europe is in a recession.

Add worries that Chinese growth is slowing to that mix of concerns and prospects for a dollar rise appear likely. Should the dollar continue to rise, it would constitute yet another headwind for gold.

In addition, the prospect of more hedge fund liquidiation threatens gold with more declines.

 Overnight, major Asian stock indexes were all down more than 1 percent, but European indexes halted their one-week fall to post modest gains. On Wall Street, stock futures pointed to a higher open.

It's not only because of the stronger dollar. The year-end fund redemption and margin call demand from other markets also contributed to the selloff, a Shanghai-based trader told Reuters. We might see further weakness in prices as the sentiment around Europe remains rather bearish.           

By early Thursday gold was up slighty in extremely light trading, while both the euro and the dollar were trading in a tight range.

Comex gold added $4.60 to $1,591.50, while spot gold rose $14.15 to $1,588.54.

Comex silver was up eight cents to $29.02, while spot silver slipped seven cents to $29.03.