Gold fell back as the US headed for lunchtime today, dropping from the European high of $677.50 to just $667 as London closed for the day.
The sharp sell-off in global stocks continued, meantime. Wall Street opened higher after Tuesday's 3.3% drop, but the European markets ended 1.8% lower in London and 1.4% across the Eurozone, erasing 2007's gains to date.
In Tokyo the Nikkei has already closed 2.9% lower today. And taking profits in gold to cover losses elsewhere looks like the fall guy for Tuesday's huge 4% drop in gold – followed today by a return to the low $660s.
"If you are long in gold and hold shares as collateral to cover margin requirements, then you have to sell when the stock markets fall," said a dealer in Singapore to Reuters earlier.
"This is also related to long positions in New York. That's what we call a chain effect. But bargain hunters are coming in because the price is cheap and good."
"This never was a gold-market specific problem," said John Reade, an analyst at UBS in London to Bloomberg. "[Gold] was reacting to other stuff.
"If the Chinese market was responsible for the sell-off yesterday, we should be okay." But the speculative long position in gold built up by short-term traders so far this year could make further falls likely.
"Everybody who wanted to sell gold probably didn't get out in a day," says Reade. "The position is so large."
Economic news from the US today is also encouraging short-term gold traders towards the exit door.
The US economy grew by only 2.2% at the end of 2006, Washington said today, below government forecasts. Sales of new home fell 16.6% last month, the fastest collapse in 13 years.
That suggests lower inflation ahead, something that many investors wrongly assume would be bad for gold prices. Federal Reserve chairman Ben Bernanke has done his best to shore up confidence in the US economy too, saying that the failure of 22 subprime lending companies so far has been "contained".
There's nothing to fear from the sharp fall in global asset prices either, says the Federal Reserve's New York president, Timothy Geithner.
He reckons that the US economy shows "remarkable resilience" amid this week's sudden collapse in stock prices.
But what might yesterday's drop really mean for investors – including those "ghouls" who buy gold – click here and read on now...