Gold slid 2 percent in Europe on Monday as hopes the global economy may be bottoming sparked a rally in stock markets and industrial commodity prices, denting gold's appeal as a haven.
Spot gold fell to a low of $873.45 an ounce and was quoted at $880.65/882.15 an ounce at 0905 GMT from $892.50 late in New York on Friday.
Analysts say a surge in equity prices suggests investors are selling gold in favour of stocks and shares.
"The stock markets last week put up a good performance and the non-farm payrolls figures out of the United States were not glorious, but people had anticipated even worse," said Afshin Nabavi, head of trading at MKS Finance.
"The market is a little nervous," he said. "$875 is a very important support and there will be difficulty breaking it down, but from the look of things at the moment, it wouldn't be impossible to see the low we made in January this year."
European shares rose early on Monday, after Asian stocks climbed to a six-month high on hopes that the global economic downturn was nearing a bottom.
Industrial commodity prices also climbed on hopes a recovery in the beleaguered economy could resuscitate demand. Base metals such as copper climbed, while oil prices gained more than $1 a barrel.
On the currency markets, the yen fell broadly as investors took on perceived riskier assets on growing hopes there is light at the end of the tunnel for the ailing global economy.
