Gold prices rose in volatile trade on Tuesday after briefly extending the previous session’s 2.5 percent slide below $1,800 an ounce, as the dollar pared some of its early gains versus the euro, taking some pressure off the precious metal.

The euro remained in the doldrums however after a report that euro zone politicians may provide fresh support to debt-laden Greece was denied, and as the cost of Italy’s borrowing reached unsustainable levels.

Spot gold was up 0.7 percent at $1,824.89 an ounce at 1340 GMT, having earlier fallen as low as $1,798.75. It has dropped nearly 2 percent this week after posting its biggest monthly gain since November 2009 in August.

VTB Capital analyst Andrey Kryuchenkov said gold was set to recover its usual inverse trading relationship with the dollar, “provided the euro holds up and risk sentiment improves a little. Otherwise, extreme risk aversion will see bullion trading with the greenback again.”

Concerns over the ability of some euro zone economies — chiefly Portugal, Italy, Ireland, Greece and Spain — to manage their burgeoning debt helped drive gold prices to record highs above $1,920 an ounce earlier this month.

But the metal has faced headwinds around that level, twice failing to sustain a rise above $1,900 an ounce. Dollar strength has returned as a weight on gold after the currency has risen in line with the precious metal in recent years as both benefit from risk aversion.

“A stronger dollar may make the journey north more of a struggle,” said UBS in a report, noting that action by the Bank of Japan and Swiss National Bank to curb strength in the yen and franc meant “the dollar is emerging as the last safe haven among the world’s major currencies for risk-averse investors.”

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