Gold futures trading in the US tumbled nearly 5% on Wednesday, sinking below the US$1,600 level for the first time in nearly three months. Spot gold prices too have slipped under the US$1,600 mark.
In the process, the yellow metal also fell below its 200-DMA for the first time in almost three years.
A steep drop in the euro and renewed strength in the US dollar were primary reason for the meltdown in the precious metal. Global investors are increasingly inclined to hold cash amid no sign of an immediate fix to the euro area credit crisis.
Silver futures closed down 7% yesterday, while copper lost nearly 5% and palladium sank almost 7%.
Gold prices are trading barely changed in Asian trading today.
Spot gold was virtually flat at $1,576.35 an ounce at 9:35 a.m. in Singapore after swinging between gains and losses.
The yellow metal has lost 8 percent in the past three days, and is set for a second weekly loss.
The February-delivery contract slumped as much as 1 percent to $1,571.50 on the Comex.
Spot gold fell to $1,563.38 yesterday, the lowest level since Sept. 26.
This week’s declines have come even as holdings in bullion- backed exchange-traded funds rose to an all-time high, gaining 0.1 percent to 2,360.810 metric tons yesterday, according to reports.
Spot gold reached a record $1,921.15 in September.
If gold falls to $1,536, it will mark a 20% decline from the September peak - regarded by many investors as a sign of a bear market.
Gold has dropped 18 percent from the all-time high.
Also read:
Crude oil skids as OPEC hikes output