Gold futures have ended at a seven-month low, resuming their downward march, as some investors opted to leave the market amid growing dissatisfaction with gold's performance.
The most actively traded contract, for April delivery, on Friday fell $US5.80, or 0.4 per cent, to settle at $US1,572.80 a troy ounce on the Comex division of the New York Mercantile Exchange. This is the lowest settlement price since July 18 at $US1,570.80 a troy ounce.
Gold has slumped 2.3 per cent this week, and is down 12.5 per cent from its October 4 high of $US1,796.50 a troy ounce.
Gold's decline came amid increased competition from better performing equity markets and as investors worried about the exit of large fund managers like George Soros from the bullion market.
Gold prices made a decisive move below the closely watched $US1,600 after a bearish reading of the Federal Reserve's January meeting minutes was released on Wednesday.
Fed officials showed growing discomfort with existing monetary policy, sparking worries that the central bank may tighten its easy-money measures sooner than expected.
"Market participants fear that the punch bowl is going to be removed a lot sooner than anticipated ... that detracts from wanting to buy gold as an inflationary hedge," said Matt Zeman, head of trading with Kingsview Financial.
Zeman said that $US1,523 is the next level of support for gold, though the market could witness a temporary rally or "dead cat bounce" next week before prices resume their march lower.
"Gold has a lot of things working against it right now," he said.
Brokers and analysts said that easing fears with regard to Europe's future added to the pressure on bullion prices.
Gold is widely considered a haven from economic uncertainty and currency risk, but demand for such assets tends to wane when investor fears subside.
"One of the things that drove a lot of people into gold is fear of the European Union breaking up and the euro disintegrating. None of that happened," said Frank Lesh, broker and futures analyst with FuturePath Trading.
"Some of the reasons you'd buy and hold gold are just not there anymore," he added.
In a new twist, a record number of speculative investors is betting on lower gold prices through short futures positions on the Comex.
These bearish positions are adding to the weight on gold prices, brokers and analysts said.
"We've got people getting short gold, and rightfully so," Lesh said.
Settlements (ranges include open-outcry and electronic trading):
London PM Gold Fix: $1,576.50; previous PM $1,577.00
Apr gold $1,572.80, down $5.80; Range $1,569.30-$1,587.00
Mar silver $28.460, down 23.9 cents; Range $28.335-$28.895
Apr platinum $1,607.40, down $12.60; Range $1,604.40-$1,631.60
Mar palladium $735.30, up $17.00; Range $728.40-$741.30