Also prompting the upward drive of the yellowish metal was the reduced value of the U.S. dollar, which lost value against its counterpart currencies. The dollar lost value as conjecture indicated debt-hobbled Spain might be preparing to request international bailout aid to help its struggling banking sector.
The Iberian nation might be heading toward a line of credit from the rescue fund established for the benefit of nations being victimized by the sovereign debt crisis. That proved to be beneficial to the shared currency of the European Union, which the precious metal typically tracks.
By contrast, bullion performs the inverse of the world's reserve currency.
"The dollar trading lower, and talk about Spain set to ask for a bailout is helping set the positive tone," states an email to Bloomberg penned by vice president Steve Scacalossi with TD Securities Inc. in New York.
At 11:08 a.m. on Tuesday, gold futures climbed 0.45 percent, a $7.90 lift to $1,745.50 per troy ounce.
One day after losing 1.3 percent of its value, the precious metal was reaching higher.
Monday's loss marked bullion's steepest drop since early July.
"The gold market experienced momentum-based selling but appears to have found a base" at roughly $1,735 per troy ounce, states a report penned by analyst Mark Pervan with Australia & New Zealand Banking Group Ltd., according to Bloomberg.
By Monday, gold futures had gained roughly 11 percent on the year as the precious metal barrels toward a 12th consecutive year of annual gains.
Economic news supports gold
Investors were reeled back in by lower prices of gold, Reuters reports.
The likelihood of Spain seeking a bailout to aid its hobbled banking sector proved to be beneficial to the euro, which also capitalized on stronger data released by Germany and the U.S.
Bullion is benefiting from anticipations about central bank intervention keeping interest rates low while supporting inflation for long-term purposes.
September saw consumer prices increase in the U.S. while gas prices increased. But the third round of quantitative easing deployed by the U.S. Federal Reserve is unlikely to stop.
"Particularly for investors and central banks, the incentives to buy gold are still there. Quantitative easing, low interest rates, counterparty risk concerns, all these factors are in place, and investment interest is definitely there," analyst Tobias Merath with Credit Suisse told the news source. "The way we interpret the current episode is that we saw a meaningful test of $1,800, we didn't manage to break that and now we have retreated a little bit. People have taken a bit of profit, but we think this is a temporary story."
Monday's losses were largely linked with stronger retail sales data released by the U.S.
The dip also was influenced by economic data late last week about the labor market and consumer confidence.
"The open-ended nature of QE3 is only likely to see increased choppiness in gold, since many investors will be pulling out on fears that the Fed could reconsider its ultra-low interest rate guidance and monthly liquidity injections under the ongoing stimulus," states a note penned by VTB Capital, according to Reuters. "Temporary and, potentially, deeper pullbacks are to be expected, especially given slack physical activity and bullion's strong correlation to riskier assets."
MarketWatch reports slips in value on Monday continued from the Friday losses, which capped a week of dropping 1.2 percent.
That prompted the yellowish metal to fall to its lowest value since the middle of last month.
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