Gold consolidated above $1,210 an ounce in Europe on Wednesday after rising 1 percent in the last session on the back of resurgent fears over euro zone debt levels, with a retreat in risk aversion capping gains.

Spot gold was bid at $1,211.85 an ounce at 1118 GMT, against $1,210.65 late in New York on Tuesday. US gold futures for August delivery eased 90 cents to $1,212.60.

The precious metal rose on Tuesday after a downgrade of Portugal's debt rating by Moody's brought concern over euro zone sovereign debt back into the spotlight, but it is struggling to build on those gains as risk aversion eases.

"Gold is going to suffer as we see a return to calmer markets," said Credit Agricole analyst Robin Bhar. "Without the Moody's downgrade of Portugal yesterday, we wouldn't be up at these levels.

"You have got to be frightened to want to be long of gold, and we don't have that factor," he added.

"But we still have uncertainties. There are still worries about debt, about currency devaluation, about inflation becoming higher. That is all supportive of this notion of there being a fairly solid floor for gold."

Strong US corporate earnings and easing concerns over euro zone debt helped the euro to hold near a two-month high versus the dollar on Wednesday.

Other assets struggled to maintain early gains, however, with stock markets dipping in Europe. Oil prices eased a touch but remained near the two-week highs they hit late in the previous session, while copper held firm.

Establishes support

From a technical perspective, gold has established support just below $1,200 an ounce. Analysts who study charts of past price moves to determine the future direction of trade are cautiously optimistic its correction may be over.

"Intraday charts appear to be forming a small basing pattern, and the recovery through the $1,215/18 area suggests that the downtrend from the June peak has stabilised," said Barclays Capital in a note.

"The risk is now for a choppy move higher towards $1,225/27.

However, in the least, a recovery above $1,235 is needed to suggest that gold is primed to post new 2010 highs."

In India, the world's main consumer of gold, demand was muted as international spot prices rose, with dealers reporting buying interest had waned after rising on a price dip below $1,200 an ounce.

"I have plenty of orders in between $1,185-1,195 (an ounce)," said a dealer with a private bank in Mumbai.

Among other precious metals, silver edged up to $18.24 from $18.20.

The gold-silver ratio -- how many ounces of silver are needed to buy an ounce of gold -- hit a two-week low of 66.5 on Tuesday as silver outperformed gold in a rising market.

"We require a close below 65.55 to bring in fresh selling of the ratio," said ScotiaMocatta in a note.

Elsewhere platinum was at $1,523.50 an ounce against $1,524.50, while palladium was at $464 against $463. – Reuters