Gold lost more than 1 percent on Thursday, set to post its biggest one-day loss in about six weeks, as the dollar rallied and investors sold bullion to cover losses in equity and other commodity markets. Gold retreated from its record high of $1,444.40 an ounce set earlier this week, as a cross-asset sell-off accelerated on Thursday.
Both Wall Street and oil fell sharply after an unexpected Chinese trade deficit and renewed eurozone debt jitters fuelled global growth concerns. "Spain's downgrade is clearly helping the dollar at this point. A few weeks ago, the story was everybody rushing into gold rather than the dollar, and now the tide seems to have shifted a bit," said Peter Buchanan, senior economist of CIBC World Markets.
Ongoing violence in Libya and rising political unrest across the Arab world also failed to lift gold despite worries about global economic growth because of oil's spike. Spot gold fell as low as $1,402.72 an ounce, a two-week low, and was later down 1.6 percent at $1,406.20 an ounce by 12:45 pm EST (1745 GMT). US gold futures for April delivery fell 1.6 percent to $1,406.30.
On charts, spot bullion bounced off support after briefly falling below its 20-day moving average. Tom Pawlicki, precious metals and energy analyst at futures broker MF Global, cited technical selling as gold this week has failed to clear key resistance at $1,435 an ounce - the upper trendline of a long-term rising channel dated back from 2008.
Gold was hit as the dollar rose 0.5 percent against the euro after Moody's downgraded Spain to Aa2 from Aa1 with a negative outlook, leaving the euro vulnerable to more downward pressure in the coming weeks. Among other precious metals, silver fell 3.5 percent to $34.79 an ounce. Platinum slid 2.3 percent to $1,756.24 an ounce, while palladium lost 1.8 percent to $762.97.
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