Gold prices regained some early losses Wednesday after the European Central Bank intervened in the bond market to cap dangerously high yields on Italian, Spanish and French bonds.

The more acute Europe's sovereign debt crisis becomes, the more investors have opted, recently, for dollar-denominated assets and German government bonds, a trend that means gold prices follow risky assets like stocks rather than function as a safe-haven.

Once the ECB started buying distressed bonds, the yields fell and prices stabilized. Yields on Italy's 10-year note declined slightly from session highs near seven percent, and yields on Spain's five-year notes fell from a record high.

The yield on French 10-year bonds was rising toward four percent before ECB intervention. By contrast, the yield on a comparable German bond was about 1.9 percent.

Despite the ECB intervention, the euro lost ground, and European stocks posted mixed results with France's CAC 40 fractionally higher and Germany's DAX down half a percentage point. The FTSE 100 was off 0.35 percent.

Our economists note that we may enjoy a brief respite from European contagion, but the fundamental threat to the world economy and financial markets remains, Barclays Capital said in a note.

The dollar was modestly higher. Futures on the Dow Jones Industrial Average, Nasdaq 100 and S&P 500 all fell below fair value, pointing to a lower open.

Investors appear convinced that, but for ECB intervention, Europe's troubles will only get worse.

Gold for December delivery fell $8.40 to $1,773.80, while spot gold rose $2.66 to $17,774.48.

Silver for December delivery slipped 14 cents to $34.32 while spot silver nine cents to $34.38.