Gold prices recouped big early losses Thursday to start Comex floor trading about one percent down as the U.S. dollar fell against the euro on hopes new Italian and Greek governments may pave the way for Europe to avert a recession.
Silver likewise pared an initial loss of 3.7 percent, to start the day's trading down 2.2 percent.
In Italy, markets were encouraged that Prime Minister Silvio Berlusconi dropped his call for national elections and that Mario Monti, a respected former European Commissioner, emerged as Berlusconi's likely successor.
Greece's new prime minister will be Lucas Papademos, a former vice president of the European Central Bank.
It was enough to lift the euro off a one-month low, pare skyrocketing interest rates on Italian bonds and give a modest lift to European stocks.
George Cocalis, senior market strategist for PFGBEST in Chicago, said gold has support around $1,750 but if it closes below that level on the Comex it could fall as low as $1,710 before a quick rebound.
It all depends on which gold personality shows up today, he said. Either you have people who want cash, who need cash because of a margin call after the drop in the S&P 500, or you have safe-haven buyers. What you saw (Wednesday) was people wanting cash.
Gold for December delivery was down $20.80 to $1,770.80, while spot gold rose $1.65 to $1,767.93.
Silver for December delivery fell 52 cents to $33.84, while spot silver added six cents to $33.96.