Gold priced in euros also came under pressure from the pick-up in the single European currency but remained within less than 2 percent of record highs struck the day before.

European Commission President Jose Manuel Barroso said the group would examine how the euro zone could issue bonds jointly, which investors took as a step towards solving the debt crisis, but he added this would be no magic bullet to the end of the problem.

Equity markets on both sides of the Atlantic rose following Barroso's comments, which weighed on gold and other safe-havens such as German government bonds.

But analysts said that with no immediate solution to the crisis in sight, the bullion price would continue to react to surges and retreats in investor appetite for risk.

Spot gold was last down 0.8 percent at $1,818.49 an ounce at 1405 GMT, having lost 2.0 percent so far this week and set for its second weekly fall, its longest since early July.

Gold priced in euros was last down 0.7 percent at 1,329.99 euros an ounce, just 1.8 percent shy of the all-time high at 1,373.92 euros hit on Monday.

"The upside is a little capped at the moment. While the ongoing economic concerns, in Europe in particular are gold-positive, it's not enough at the moment to create a catalyst to drive prices higher."

"In general, broad, fresh investment demand has slowed. We had a pickup in speculative positions last week, but ETF flows and coin sales have slowed as well, so we're missing that momentum."

Concern about the deepening European debt crisis grew after Moody's Investor Services cut its ratings on the debt of France's two largest investment banks because of their exposure to Greece, while Italy paid more in interest at a sale of its five-year bonds than at any time since joining the euro.

Copyright Reuters, 2011