Last week, spot gold took quite a beating with prices breaching key threshold levels, signalling a desire to shed risky assets. Gold prices crashed through the $1600 for first time since July, falling below its 200 day moving average, a level at which market players automatically sell to avoid further losses.
The current demand for US dollars drives the currency surging against most of its counterparts, which also sparked the yellow metal sell off. By Thursday, spot prices had plunged almost 8.6%, and were on path to post its first quarterly loss in more than three years, after the US Federal Reserve failed to increase stimulus measures.
With the recent turbulence in global markets, traders were also liquidating their gold holdings to cover their equity losses.
The precious metal failed to hold on to any gains as it slid the most in 11 weeks, weighed down by the euro zone debt crisis.
Analysts expect, gold pricesto continue struggling at prices below its 200 day moving average, though strong physical demand from India and China may help to keep prices buoyant.
Gold also managed to post a gain on Friday, stimulated by a fall in the UD doller.
