Gold crashed more than US$100 lower on Friday as a slide turned into a free-fall, with weeks of volatility, renewed strength in the dollar and talk of hedge fund liquidation wrecking its safe-haven status.
Widespread talk of possible selling by big hedge funds covering losses in other markets set off one of the biggest routs on record. Silver futures, which had attracted even more speculative funds over the past year, dived nearly 17 per cent, the biggest daily loss since 1987.
Gold slumped by more than 6 per cent -- its biggest slide since the financial crisis in 2008 -- to hit its lowest since the start of August as this week's losses accelerated, even as stock and oil markets stabilised after Thursday's rout.
Even after the steep loss, gold remained up 16 per cent for the year to date. Spot silver was down almost 1 per cent for the year.
Mounting fears this week of a global recession and a deepening Greek debt crisis made investors treat precious metals like any commodity, ignoring the safe-haven appeal that had made them a must-have in times of trouble.
"I'm sure talk of hedge fund liquidation is helping to pressure things, though there's no confirmation of any single fund selling," said Jonathan Jossen, an independent COMEX trader.