Gold Prices Backpedal Ahead of Key Vote by Slovak Lawmakers

Gold prices backpedaled Tuesday as the euro slipped, and the dollar rose, ahead of a vote by Slovak lawmakers on whether to approve an expansion of Europe's bailout fund.

Slovakia is the last of the 17 members in the Eurozone to vote to boost the power of the fund, seen as essential to protecting the continent's banks from a Greek default.

The dollar was up 0.32 percent on the ICE US Dollar Index and the euro was declining, along with European stocks.

Markets were uncertain how Slovakia will affect the price of gold. If Slovakia fails to approve the bailout fund initiative, the dollar is expected to rise against the euro, which could cut gold's price, since gold has been moving in the opposite direction from the dollar.

But gold also is vulnerable to an approval of the bailout initiative by Slovak lawmakers.

A plan to end Europe's debt crisis is bearish for gold, however until investors believe whatever plan they have is going to work, gold will be supported, Wang Xiaoli, chief investment strategist at Citic Futures Co., told Bloomberg.

Physical buying is keeping a floor on the price of gold. Indian buying remained elevated relative to average year-to-date levels, UBS said in a client note. Physical demand in China appeared robust in the first trading day after the Golden Week holiday.

Gold for December delivery fell $10.40 to $1,661.40, while gold for immediate delivery eased $17.95 to $1,657.84.

Silver for December delivery was off 51 cents to $31.47, while silver for immediate delivery retreated 64 cents to $31.52.