Gold fell on Thursday, pulling back from the previous session's one-week highs, as a series of successful euro zone bond auctions erased some safe-haven demand for the metal, although consumer demand remained fairly buoyant.
Palladium nudged at 10-year highs above $800 an ounce, having risen by 8 percent so far this week, driven by expectations of faster global growth, stable investment demand and optimism stemming from the Detroit auto show.
Debt sales by some of the euro zone's most economically fragile members such as Portugal and Spain have met with better demand from bond investors and tempered some of the concern that Lisbon and possibly even Madrid may need to tap into an international rescue fund for cash.
This pushed spot gold XAU= down, for the first time following three days of gains, by 0.5 percent to $1,380.21 an ounce by 1030 GMT after rising as high as $1,388.90 on Wednesday as the U.S. dollar dropped against the euro.
U.S. gold futures for February delivery GCG1 were down 0.4 percent at $1,379.60.
"Risk aversion is coming down further, so this is leading to a decline in gold prices, especially because of the need for a safe haven is not that strong at the moment," said Commerzbank analyst Daniel Briesemann.
"But this should be short-lived because in the case of Portugal for example, its quite significant refinancing costs are still of concern," he said.

The euro managed to hit one-month highs against the Swiss franc EURCHF= and edged up against the dollar after the day's debt sales.
Reflecting the retrenchment in investment demand for gold, holdings of gold in the world's largest gold exchange-traded fund, the SPDR Gold Trust (GLD), were unchanged around their lowest since June, while ETF Securities' London-listed gold fund saw redemptions on Wednesday. [GOL/SPDR]
"The bounce gold has had in the past few days seems to be fizzling out as sovereign debt concerns take a back seat. With so many gold bulls already heavily invested, traders are beginning to ask where the next wave of buying is going to come from?" wrote Manoj Ladwa, a senior trader at ETX Capital.
In the physical market, dealers noted purchases from main consumer India as well as China, which could offer support for cash gold. Premiums for gold bars were at two-year highs in Singapore and Hong Kong.
"There are talks the Indian government is looking to increase tax on gold imports, so locals are looking to stock up beforehand. They are moving into coins and gold bars," said a dealer in Singapore.
"Local demand from China is firm before the Lunar New Year and buying interest from Turkey is also strong."
Gold has risen by nearly 1 percent this week, thanks to the jitters over the euro zone's debt problems, but remains nearly 3.5 percent below the record $1,430.95 struck in December.
Platinum and palladium have found renewed favour among investors recently, as holdings of metal in the larger ETFs remain near record levels, while optimism grows over the outlook for the auto market this year, a key source of demand for both metals.
Palladium is trading around its highest since March 2001, above $800 an ounce.
French carmaker PSA Peugeot Citroen (PEUP.PA) said on Thursday it expects markets in China and Latin America to rise this year after growth outside Europe helped its own 2010 vehicle sales grow 13 percent to a record.
Palladium, which is consumed primarily by gasoline-powered vehicles used largely in North America and emerging economies, virtually doubled in price last year as investors prepared for car markets in countries like China, Brazil and India to grow.
The spot price XPD= was last down 0.5 percent at $804.00 an ounce, having hit a 10-year high of $814.00 overnight.
Platinum XPT= meanwhile eased 0.4 percent to $1,791.00, still near its highest since early November.
Silver XAG= fell 1.7 percent to $29.17 an ounce, echoing the softness in the gold price, while the gold/silver ratio ticked up to 47.3 from 46.7 the day before.


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