Gold prices clawed back some losses today after suffering their heaviest slump in 30 years triggered by weak Chinese growth data and reports Cyprus was planning to sell part of its reserves.
Analysts said the 13 percent drop in prices between Friday's open and Monday's close could show gold's 12-year bull-run was at an end, with investors turning away from the metal, which is traditionally a hedge against inflation.
At 0535 GMT in Asia, an ounce of gold cost $1,360.99. The commodity enjoyed a lift after sinking to as low as $1,338.00 at one point in New York on Monday -- a 10.9 percent fall and its sharpest slump since 1983.
Investors were spooked after China released data Monday showing growth in the world's number two economy had slowed in the first quarter to 7.7 percent, below forecasts and indicating a recent pick-up remained fragile.
The news also hit equity markets, while other commodities also tumbled, with the May contract for Brent crude falling below $100 a barrel for the first time since July. China is a huge importer of oil to drive its vast economy.
"It's the speed of it and the extent of the sell-off that shocked everybody," Kelly Teoh, a market strategist at IG Markets in Singapore, told AFP. "For the rest of the week it's going to look quite bearish."
The longer-term view is that with inflation expectations still flat -- as US and Chinese data indicate -- people who buy gold as a hedge against rising prices have been driven to dump bullion.
"Gold has had a 12-year run. It's done really well. But if you're holding a position and you're seeing you're getting a better yield in the cash markets it's a natural move," said Teoh.
Adding to unease were reports last week that the central bank in Cyprus is looking at selling some of its 14 tonnes of gold to help pay for a bailout agreed with the European Union and International Monetary Fund.
Joyce Liu, investment Analyst at Phillip Futures in Singapore, said such a move fuelled concerns that other troubled countries could follow suit as they struggle with ongoing debt woes.
Liu also said traders were likely moving out of the precious metal, which is seen as a safe bet in times of economic uncertainty, as the US recovery picks up and the eurozone crisis eases.
In Hong Kong, jeweller Amy Lee said buyers who had rushed to buy gold after Friday's losses had cooled off on Tuesday as they wait for prices to fall further.