GOLD and other precious metals tumbled in New York on fund liquidation, with technical selling exacerbating the falls.
Most-active December gold fell to its lowest level in a month, while other precious metals fell to multi-year lows. Charts showed nearby silver fell to its weakest level since February 2006, platinum to its lowest level since July 2005 and palladium to its weakest level since July 2003.
December gold lost $US34.50 to $US804.50 an ounce on the Comex division of the New York Mercantile Exchange. The contract at one point fell as far as $US786.70, the lowest level since September 17, when it was last below $US800.
December silver fell US54.5 cents to $US9.635 and bottomed at $US9.25.
Many market participants recently boosted gold as equities tumbled, explained Dominick Cognata, broker with BCT Trading.
"They're just collecting their profits right now," he said. "There's a lot of fund selling. All of the funds got in and out. Silver is doing the same thing."
In many instances, funds might be liquidating to capture any remaining profits in commodities to offset recent losses in equities, he added.
"It seems like some of these hedge funds are forced to liquidate either by people making withdrawals or by the prime brokers that carry them," said George Gero, vice president with RBC Capital Markets Global Futures.
Frank Lesh, broker and futures analyst with FuturePath Trading, described a market in which risk aversion is occurring and market participants were selling to meet margin calls - both in the metals themselves, or else to raise cash to meet margins calls in other markets.
"There's a lot of fear out there," Mr Lesh said. "People at times just want to go to cash. The swings are so wide that it scares people, especially from trying to hold this."
Traders who might have entered the long side of the market in the $US830s to $US840s just yesterday were suddenly looking at losses of more than $US30 to $US40 early in the last session, Mr Lesh said.
"It's just treacherous," he continued, adding that investors are "running away from the risk" of holding positions in a number of markets.
When the sudden downdraft occurred early in the session, sell stops were hit in thin trading conditions, reported Leonard Kaplan, president of Prospector Asset Management.
December gold previously stopped on the downside in the $US820s several times this month, including a low of $US822.50 on October 3.
"You could see that was a level that needed to be defended," Mr Lesh said. "When we got below there, we definitely got into sell stops and liquidation. In silver, below the $US10 area looked like a spot where we had people bailing out."
Weakness occurred in a number of commodities.
The Continuous Commodity Index was 8.72 points lower at 376.98 shortly after gold closed and hit a low of 371.02, its weakest level in two years. November crude oil fell below $US70 a barrel for the first time since August 2007.
Meanwhile, January platinum fell $US83.90 to $US891.30 an ounce, while December palladium declined $US22.50 to $US173.10 an ounce.
"There is continued pressure from funds having to liquidate," said one trader. "There is forced selling to get money back to their investors.
"There is a flight to cash, or whatever you want to call it. There's just demand destruction across the board."
January platinum fell as far as $US852 an ounce, breaking down through the low of $US940 touched on October 6. And December palladium bottomed at $US165.05, breaking down through the October 10 bottom of $US182.20.
