The dollar took enough of a hit to convince traders that gold was a safer place to park funds in for the next few sessions.

The gold price is now flirting with critical support levels ($532-$535), and it faces a possible short- to medium-term trough -- one that could even breach the $500 level.

A global scramble for the asset is now unfolding, as the fund-driven price action is snowballing and attracting investors from all walks of life.

Although gold remains vulnerable to at least another bout of selling as we head into next week, the fact that it erased Thursday's losses demonstrates (for the time being) the fact that this bull is alive and kicking.

The hikes are not as much an attempt to stave off inflation as they are designed to attract investment into the dollar by would-be debt holders (China, Japan, etc.) of the U.S. currency.

The huge pool of global liquidity out there has not found a better place to rush into, and is enchanted with gold and its prospects.

The trigger fingers hovering over all of the instability-sensitive commodity 'buy' buttons (gold, oil, etc.) are as jittery as ever.

In the gold trading pits, economic uncertainties are taking a back seat to uncertainties of a different nature these days.

In a world where news stories continue to make ominous ripples, gold is acting like the thermometer of collective global anxiety.

Increases in oil inventories and a firmer dollar put a dent into gold prices early Tuesday. Gold fell about 1% before recovering slightly and stabilizing.