Gold Prices continued to slide early Wednesday, dropping more than 3.5% to a fresh 5-week low of $749 per ounce as world stock prices sank and the US Dollar leapt yet again on the currency markets.

"Although liquidity fears are easing" in the banking sector, notes Walter de Wet at South Africa's Standard Bank, "uncertainty and fears about global growth prospects remain prevalent.

"Fed fund futures now are pricing in a 64% chance of a 50 basis-point cut by the Federal Reserve next week. [But] gold is still on the back foot, with more Dollar strength in the pipeline."

The Euro today accelerated its plunge vs. the Dollar during Asian trade, losing almost 2¢ in just 15 minutes to reach its worst level since Dec. 2006 at $1.2740.

US Treasury bonds caught the "safe haven" bid once again, pushing the yield offered to new buyers of 3-month notes down to 1.06%.

The British Pound meantime plunged to a fresh five-year low vs. the Dollar of $1.6250 – down more than 7% from Monday's start – after Bank of England chief Mervyn King said the UK is now entering recession and forecasting a "long march back to boredom and stability" in banking and monetary policy.

The Gold Price in Sterling held above £460 an ounce, while short-term gilt yields sank as UK bond prices jumped in response. The annual return offered by 6-month gilts sank to 2.83% – barely half the current rate of consumer-price inflation – despite the tidal wave of fresh Treasury debt now required to fund the government's £250 billion ($400bn) rescue of the private banking sector.

Leading the tax-funded fight against recession worldwide, UK prime minister Gordon Brown has also promised a Huge Government Sending Program. But "Britain's public debt is [already] £1,866 billion," says Tory MP Brooks Newmark, writing in The Guardian today.

"Equivalent to 125.5% of GDP [it's] nearly three times larger than the government's published figure" thanks to the off-balance-sheet liabilities owed on infrastructure built through private finance initiatives (PFI).

Here in London this morning, the FTSE100 dropped 150 points, plunging back towards the 4,000 mark – a level first crossed on the way up in 1996.

The Paris stock market lost 4% Wednesday morning. The Nikkei index of Japanese stocks closed 631 points lower at 8,674 – more than 23% down from the start of October – as the flight-to-cash forced a fresh jump in the Yen's foreign exchange rates.

Japanese investors held almost $6 trillion in overseas assets by the end of 2007. The Yen has since jumped by more than one-third against "Carry Trade" favorites including the British Pound, Australian Dollar and New Zealand Kiwi.

"Gold looks destined to challenge $1,000 once more," writes Declan Fallon of the Covestor tracking service for TheStreet.com today, "but under a strengthening Dollar it may succumb.

"Whether this happens or not, remaining commodity prices will provide opportunities to bottom-fish. Industrial metals in particular will benefit in a recovering economy.

"We are six years into a 20- to 35-year secular commodity bull market. It's time to take advantage."

Commodity prices continued to slump early Wednesday, with US crude oil falling back below $70 per barrel and copper futures traded in London losing 4.8%.

"The high nickel prices of the past two or three years are gone," claimed Carey Smith, an analyst at the Alto Capital brokerage, at a conference in Perth, Australia today. The base metal – a key element in stainless steel and electroplating – has dropped 80% of its price since mid-2007.

"The selling is not due to fundamentals," says Smith. "It's hedge funds and other hot money rushing to get out of the market."

The same trend towards No Credit, No Leverage continues to suck speculative cash out of gold as well. But if the global bail out of private banks – now promising some $3 trillion of government money worldwide – does stem the decline in asset prices, "the turn in prices back toward higher levels, especially for base metals and energy commodities, could be very fast," says New York research and analysis group CPM in its latest Market Commentary.

"There is so much money piled up in cash and Treasuries, with its owners waiting to re-allocate these funds...when the turn comes it could be a rapid appreciation off of the floor for many commodities prices.

"If one waits for the first 5% or 10% of the recovery before in-vesting, one may well miss the first 30% of the upward revision in prices – when it comes."