Gold sank further into bear-market territory on Monday as prices dropped to a two-year trough on fears of central bank sales and less monetary stimulus, while holdings on global exchange-traded funds hit their lowest in more than a year. Gold hit an intraday high at $1,495.16 an ounce, but then plunged to $1,427.14, its lowest since April 2011. It stood at $1,452.50 by 0709 GMT, down $25.85.
Having fallen nearly 7 percent over two sessions, gold is on course for its biggest two-day drop since September 2011. "Breaking $1,500 is not a good sign for gold. We don't know what the next support level is going to be," said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.
"Even though there are some shorts in the market, I think people still want to push the price down. There's no excuse to push it up, unless there's a war between North and South Korea. There should be a rebound as the market is already oversold." US futures for June delivery extended losses to fall more than 5 percent as Tokyo gold futures tumbled around 8 percent, marking Japanese futures biggest daily fall since September 2011.
"I am sure we will see much higher prices after the correction. We broke $1,530 after sell orders on COMEX were triggered," said Domenic Parli, a physical dealer at Hong Kong-based Fine Metal Asia. "This morning in Asia, we had the reaction to what happened on Friday," said Parli, adding that physical buyers could take advantage of the price drop.
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