Gold plunges to its biggest three-day loss in 28 years as slide continues
GOLD plunged in value yesterday by as much as $43 at one stage as the shine came off the yellow metal.
Yesterday's losses meant it recorded the biggest three-day loss in 28 years.
Prices fell sharply as investors who typically purchase the metal preferred to hold cash in case declines in other markets trigger margin calls.
And some traders were being forced to sell profitable positions in gold in order to pay for losses incurred in other markets last week.
The difference between the intraday high and low was $128.40, the largest daily price swing on record.
The most actively traded gold contract, for December delivery, was recently down $43.20, or 2.6pc, at $1,596.60 a troy ounce on the Comex division of the New York Mercantile Exchange. The contract had touched a high of $1,666.30.
Over the past 30 days gold has lost $150 of its value.
Later yesterday gold pared back some of its earlier losses in European trading.
But it was still on course for its largest monthly slide in three years, as investors scrambled for cash in the face of mounting fear over the impact of a potential Greek debt default.
European policymakers began working on new ways to stop the fallout from Greece's near-bankruptcy from inflicting more damage on the world economy.
Industrial commodities such as silver and base metals bore the brunt of investor desire for liquidity in the face of mounting uncertainty.
In the last three days alone, gold has fallen by nearly 9pc and implied volatility has risen to a two-and-a-half year high.
Credit Suisse analyst Tom Kendall said: "It shows you that at times of extreme stress, there is not a suitable substitute to liquidity and although gold is liquid by metal standards, in comparison to treasuries, when you get this kind of flight to cash, then it really is cash that counts and that means US dollars.
"The markets are going to continue to react this week to the political situation within Europe and I don't see any quick resolution or stimulus coming to the markets."