Gold futures in New York sank almost 4 percent to trade well below $600 an ounce early Tuesday, pressured by aggressive selling due to a stronger dollar, soft oil prices and concerns over interest rate hikes.
Silver, platinum and palladium also fell as speculative liquidation swept through the precious and base metals arena. Traders said that stop-loss selling hammered gold after the price fell below first $600 and then $590, which were recent trend-line support levels.
Metals then stretched down even more as the dollar climbed anew after the core US producer price index for May rose faster than economists had expected. "Starting in Asia overnight, there was a continuation of yesterday's liquidation and disappointment over a very weak stock market," said Frank Aburto, a broker at Rosenthal-Collins Group in New York.
At 9:33 am EDT (1333 GMT), August delivery gold was down $22.60 or 3.7 percent at 588.50 an ounce on the New York Mercantile Exchange's COMEX division, dealing between $611.70 and $585.50 - its cheapest level since late March.
"Support could be at $585 and then at $575, but the way the market is trading a wave of orders could make this market go down further. There are no daily price limits at the exchange any more," said Aburto.
COMEX gold rose to $732 in mid-May, its priciest since 1980, before it began its one-month slide. Analysts said that investors are reluctant to build positions in gold now amid the extreme price volatility and limited consumer demand for metal.
Spot gold dropped to $585.25/586.25 an ounce, against $605.60/6.30 late on Monday in New York. Tuesday's morning bullion fix in London reached $590.75.
COMEX July silver fell to as low as $10.23 an ounce to post a near three-month low, before it edged to $10.34, off 6.6 percent or 72.5 cents. Spot silver sank to $10.29/10.39 an ounce, against $11.03/11.13 previously. Silver fixed at $10.47.
At NYMEX, July platinum was down $36.40 at $1,135 an ounce, after it hit a six-week low at $1,115.50. Spot platinum was worth $1,130/1,135.
Thinly traded palladium for September delivery tanked $36.75 or 11.6 percent to $279 an ounce, up from a three-month low of $275.20. Spot palladium fell to $275/280.