Spot gold prices fell to a fresh two-year low in Tuesday's Asian trading, dropping to $1322 per ounce, before rallying back above $1386, as stock markets extended yesterday's losses.
Silver dropped to its lowest level since September 2010 at $22.10 an ounce before it too recovered some ground. Oil was down on the day by lunchtime in London, while copper ticked slightly higher.
Since Friday morning, the value of total above-ground stocks of gold bullion, estimated by metals consultancy Thomson Reuters GFMS at around 174,000 tonnes, has fallen by more than $1 trillion.
Based on PM London Fix prices in Dollars, gold on Monday was down 9% from the Friday afternoon fixing, the biggest one-day drop since February 28 1983, when gold dropped 12% in a day. That in turn was the biggest single day drop since January 1980, when gold fell more than 13% one day after hitting its then all-time high of $850 an ounce.
On a two trading day basis, gold was down almost 11% by Monday afternoon's fixing, with 1983 again being the last time gold saw steeper two-day drop. By comparison, gold fell more than 18% in the two days following the January 1980 high.
"The aftershock of the previous two trading days will likely continue today with investors caught off guard and now ready to press sell buttons in any renewed weakness," said one London-based trader this morning.
The CME Group, which runs the Comex exchange in New York on which gold and silver futures are traded, raised its margin requirements Monday, following a similar announcement by the Shanghai Gold Exchange. The gold margin, which determines the amount of collateral that must be posted to cover potential losses, was raised by 19%, while silver margins went up 18%.
"At some stage [the selling] will start to dissipate," adds David Govett at brokerage Marex Spectron.
"I am sure we will see a rally at some stage this week. But given the current mood, this will no doubt be sold into as soon as it runs out of steam... A major part of this fall has been the snowball effect of people attempting to pick lows and being forced out of positions in quick order. This will discourage any bargain hunting and gold's only hope rests with physical demand."
"We continue to see the potential for lower prices," says Tyler Broda at Nomura.
"The lack of investment demand so far in 2013 has pushed gold out of equilibrium and a price as low as $1050 an ounce is possible should we see significant disinvestment occur. We are now on this path, in our view."
The world's largest gold exchange traded fund SPDR Gold Trust (ticker: GLD) continued to see outflows Monday, though at a slower rate than on Friday, with holdings falling by 4.1 tonnes to 1154 tonnes, their lowest level since April 2010.
Since the start of 2013 the GLD has seen the amount of gold held to back its shares fall by nearly 15%.
The GLD's biggest holder, hedge fund boss John Paulson, has lost around $1 billion of his personal wealth since Friday morning as a result of gold's price drop, according to news agency Bloomberg.
"While gold can be volatile in the short term and is going through one of its periodic adjustments, we believe the long-term trend of increasing demand for gold in lieu of paper is intact," says an emailed statement from Paulson & Co. partner John Reade.
"Federal governments have been printing money at an unprecedented rate creating demand for gold as an alternative currency for individual and institutional savers and central banks alike."
Along with gold and silver, industrial commodity prices fell Monday, while stock markets also traded lower.
"Weaker-than-forecast data releases in China and the US weighed heavily on market sentiment," says a note from Credit Agricole, "supporting the theory that the global economy is repeating the pattern of first-quarter strength followed by weakness over the remainder of the year."
Here in the UK, inflation remained steady at 2.8% last month, according to figures published Tuesday, while Eurozone core consumer price inflation ticked higher to 1.5%, up from 1.3% in February.
Economic sentiment in Germany and across the Eurozone as a whole meantime has fallen this month, according to the ZEW survey.
Italy should look to use some of its gold reserves to recapitalize its banking system, Il Sole 24 Ore reports. The report cites proposals to use the gold to back a so-called EuroUnionBond rather than selling it.
Gold market development organization the World Gold Council has argued that governments should consider using gold to back bond issues, and last month commissioned a poll that found 91% of Italian business leaders and 85% of citizens agree that the country's gold reserves should play a part in economic recovery.