Gold Drops Over 8 Percent in Worst One-day Decline Since 1983

Gold was at $1,335 an ounce mid-morning, down $166 from Friday’s close of $1,501.

It was the second straight day of losses for gold, which on Friday breached the $1,500 per ounce technical support level after Cyprus said it plans to sell gold in return for bailout money. Continued gains in US equities and a stronger US dollar are other factors pulling investors away from gold.

“All of a sudden, the price is below $1,500, and you have to put up more money,” The Wall Street Journal quoted Jeffrey Christian, chief executive at metals-consulting firm CPM Group, as saying. “Faced with such choices, more and more investors are choosing to dump their gold holdings rather than risk riding out the selloff.” 

The Wall Street Journal said the latest sell-off came after China showed weaker-than-expected growth, leading to concerns that China and India, the two largest gold consumers, could slow bullion purchases.

Gold for June delivery plummeted to $1,335 an ounce for a decline of 9.7 percent in intra-day trading. That’s a 10th of a percentage point more than on February 28, 1983, when the precious metal fell 9.6 percent.

Trading volume also hit an all-time high, exceeding 590,000 contracts, The Wall Street Journal said.