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Investors continued to be concerned about the eurozone situation after Fitch warned a full solution to the region's problems could be "technically and politically beyond reach".
The ratings agency added that the financial crisis is likely to persist and could consist of periods of severe market volatility that would threaten stability in Europe.
Spot gold fell nearly one per cent to $1,582.84 an ounce, before recovering to $1,593.29 by 07:03 GMT, Reuters reports.
The precious metal has been closely linked to riskier assets in recent months as investors use it to cover losses in other commodities.
Ong Yi Ling, an analyst at Phillip Futures, told the news provider there was "greater downside" for gold in the short term, adding: "Gold is still taking cues from the development in Europe - whether there will be more sovereign debt ratings downgrades."
Posted by Greg Secker
