Gold slid 1.5% yesterday in its biggest one-day drop in nearly seven weeks on selling from stop-loss orders and as Asian share markets gained strength.
Spot gold fell as much as 1.6% to $1,317.00 an ounce, and was at $1,318.11 by 0705 GMT. U.S. gold futures also fell 1.6%, while silver fell nearly 2%.
The sharp decline comes after gold posted its sixth straight weekly gain last week and after hitting $1,345 - its highest since March - last Thursday.
“Gold has been under pressure all day as equities have regained some of last week’s losses,” said one precious metals trader.
“There were some stops triggered after US gold futures breached $1,328, the price at which gold was trading at before the big move on Thursday,” the trader said. Gold climbed sharply on Thursday as worries about the financial stability of Portugal’s largest listed bank Banco Espirito Santo hammered equities and stoked fears of an European banking crisis.
But the fears have now faded, with Asian shares gaining yesterday as investors put aside concerns about euro zone banks and looked forward to corporate earnings and a raft of global economic events.
Another trader said troubles at the Portugal bank were unlikely to become a widespread European crisis.
Gold is seen as an alternative investment to riskier assets at times of geopolitical and financial uncertainties. The metal has managed to stay above $1,300 an ounce in recent weeks on safe-haven bids arising from tensions in the Middle East and Ukraine.
