Gold was steady on Tuesday, consolidating near a one and a half month high, with investors holding onto the safe haven asset due to fears that the euro zone debt crisis might engulf Italy.

Italian Prime Minister Silvio Berlusconi faces a crucial vote on public finances later this session, with his government liable to sink after failing to adopt reforms aimed at defusing the debt crisis.

Spooking investors and helping gold, ten-year Italian bonds were yielding more than 6.7 percent earlier, closing in on the 7 percent level that prompted Ireland and Portugal to seek bailouts.

Spot gold edged down 0.09 percent to $1,793.19 an ounce by 1036 GMT, after soaring more than 2 percent in the previous session. U.S. gold GCcv1 edged up 0.23 percent to $1,795.20

“Gold is consolidating, nothing goes up in a straight line (though) it’s all safe have driven, its all Berlusconi trading. You can’t let Italy fail but it’s too big to rescue,” said Calyon analyst Robin Bhar.

He added the outlook for gold is positive: “We see positioning on the long side on Comex, ETF (exchange traded fund) inflows are coming in every day, physical buying out of India, China retail buying etc.”

Technical analysis suggested spot gold could target the $1,823 to $1,829 range during the day, said Reuters market analyst Wang Tao.

Spot gold prices have rallied nearly 5 percent so far this month, as mounting doubts over the euro zone’s ability to tackle its two-year-old debt crisis drove investors to safe-haven assets, and decoupled gold from other commodities which it had followed through much of the past two months.

Underlining investor interest in gold, the world’s biggest gold-backed exchange-traded fund, SPDR Gold Trust, said its holdings rose 0.85 percent from the previous session to 1,255.66 tonnes by Nov. 7, the highest in more than two months.

“For the moment the market is worried there is still further liquidation to come, but we believe that is going to come to an end,” said Michael Jansen, commodities analyst with JPMorgan.

“There has been a very observable transfer of gold ounces in terms of investment capital from hedge funds, wholesale funds, bullion banks, towards the retail community, and that has put a floor in the price.”

Jansen forecast an average $1,869 for gold prices in 2012.

In Asia, the physical market was muted, with investors in Singapore reluctant to sell and market players in India shying away from buying the precious metal at current elevated levels.

“The sellers are not eager to cash out before prices hit $1,800,” said a Singapore-based dealer, “People are basically watching what is going to happen in Europe.”

In other precious metals traded, silver was down 0.29 percent at $34.76 and ounce, platinum rose 0.07 percent to $1,656.74, while palladium gained 1.82 percent to $670.50.

“Silver is still expensive relative to its price history,” said UBS analyst Edel Tully.

“There have been indications of intentions not only to reduce, but eliminate the use of silver in some industrial applications. This may have considerable negative implications on investor appetite.” (Additional reporting by David Stanway in BEIJING; Editing by Anthony Barker)