Gold Prices Settle Mostly Unchanged in Thin, Uncertain Trading

Gold prices settled where they started Tuesday, virtually unchanged, as uncertainty about Europe's banks offset Asian demand for physical gold.

Trading was unusually light, with investors waiting to see if lawmakers from the final member of the Eurozone would approve an enlarged bailout fund seen as essential to protecting the continent's banks from a Greek default.

But Slovak lawmakers decided to delay such a vote when it became clear that it would bring down the ruling coalition, which supports the bailout fund initiative. Another attempt by Slovak lawmakers to pass the bailout initiative is expected later this week, most likely when a new coalition government is assembled.

The uncertainty also kept stocks on both sides of the Atlantic wobbling within a tight range.

Meanwhile, physical buying put a floor under 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.

There is an incredible amount of headline risk at the moment because of the unclarity behind all the news out of the EU that may underpin gold or cause gold to sell off, Fred Schoenstein, metals trader Heraeus Precious Metals Management, told Reuters. There is no real clear direction in which gold should trade.

Gold for December delivery slipped $9.80 to settle at $1,661, while cash gold was off $13.55 to $1,662.63.

Silver for December delivery added 2 cents to $32.00, while cash silver was down 5 cents to $32.11.