Stocks fell within Asia, copper futures dropped more than 5% and oil slid a lot more than $1 on mounting worries that Europe's debt problems will plunge the planet economy into a second financial tailspin.
Spot gold dropped $3. 55 an ounce to $1, 604. 35 through 0221 GMT, having fallen to a low around $1, 582. It had plunged to some two-month low of $1, 534. 49 on Monday -- down from the lifetime high around $1, 920 an ounce struck within early September.
"The dollar is likely to strengthen on the broad scale, at least short-term. That's definitely going to become weighing on performance. Closer to the 200-day daily shifting average, we should find the bottom and I believe that's still there, " said Dominic Schnider, an analyzer at UBS Wealth Management.
"But I am confident which with lower prices, you are going to see quite strong jewellery offtake, especially as we head towards Diwali upon October 26, " said Schnider.
US gold futures dropped $9. 4 to $1, 608. 7 an ounce.
The actual uncertainties about global economic growth, mainly sparked by the possible lack of consensus on a lasting solution to the euro area debt crisis, have driven gold prices to record levels since July.
But declines in other markets prompted speculators to money in to cover losses, and investors were spooked by a revolt inside the government of German Chancellor Angela Merkel ahead of the vote to expand Europe's bailout fund on Thursday.
The euro was under modest pressure in Asia upon Thursday on profit taking and squaring of positions carrying out a large three-day rally, with investors still worried about the European debt crisis in front of the vote in Germany.
Lower gold prices stirred up purchasing in Asia, sending premiums for gold bars to their strongest since a minimum of February in Singapore and Hong Kong. In India, the premiums jumped for their highest in a year.
Traditionally in India, retail gold demand gains pace in the month of August when the festival and wedding months start, culminating with the Diwali.
Gold jewellery is an essential the main dowry basket that Indian parents give their daughters from weddings.
"Physical demand is still there. Everyone in Asian countries is buying. Everybody is buying gold and they would like delivery, " said a physical dealer in Singapore.
"We possess stocks of gold bars, but it's not enough to fulfill demand, " said the dealer, adding that buyers originated from India, Singapore, Indonesia and Thailand.
Gold's steep correction, nevertheless, has not yet unnerved investors in the No. 1 precious metal exchange-traded fund, SPDR Gold Trust.
Holdings of the biggest gold-backed exchange-traded-fund (ETF), New York's SPDR Gold Trust, which of the largest silver-backed ETF, New York's iShares Metallic Trust remained unchanged on Wednesday from Tuesday.
Source : Business-Standard