(Reuters) – Gold recovered on Thursday from the previous session’s sell-off as lower prices attracted buyers, with concern over the ability of euro zone authorities to resolve the bloc’s debt crisis still underpinning the metal’s appeal as a store of value.

But investors remained wary that fresh financial market ructions linked to the euro zone debt crisis could spark more losses in the precious metal, which this week has fallen as much as 20 percent from September’s record highs.

Spot gold was up 0.5 percent at $1,616.60 an ounce at 0938 GMT, having hit a low of $1,597.84 late on Wednesday as stocks, the euro and other assets seen as higher risk tumbled, sparking gold selling to cover losses on other markets.

“There was a range of reasons for the sell-off, but there is also potential for us to come back again,” said Danske Bank analyst Christin Tuxen.

“Gold is the one currency without debt liabilities, so if you are worried about the debt situation in the U.S. and euro zone, an obvious currency to look towards is gold. There are still reasons for it to be regarded as a safe haven.”

Stocks markets clawed back some losses in early trade, though confidence remained fragile as investors waited to see whether German Chancellor Angela Merkel would face dissent in her own party in a vote over the euro zone rescue fund.

This could potentially make further decisions on resolving the euro zone debt crisis difficult. The euro rose 0.7 percent against the dollar and German bund futures edged lower on Thursday on hopes the vote would be positive.

“A stronger euro on a ‘good vote’ will probably help gold, given the way the metal has been reacting to EUR/USD of late,” said UBS in a note.

“While any sign of rising dissent within Merkel’s party should be a bigger positive for gold – and would indeed have been a few weeks ago – we don’t think it would play out that way now as gold has shown greater vulnerability to dollar strength of late.”

U.S. gold futures for December delivery were down 20 cents an ounce at $1,617.90.