LONDON—The spot price of gold slid as investors opted for riskier assets such as European stocks and the euro after Germany's Federal Constitutional Court upheld the first Greek bailout package and the creation of the European Financial Stability Facility.
The market was also hit by heavy selling in Asia. Ahead of the New York day, spot gold was at $1,837.50 a troy ounce, down $36.10, or 1.9%.
"There have been massive, relentless offerings of gold on the markets in Asia this morning," said independent financial markets commentator Dennis Gartman. "It is far too early to know who the seller was and continues to be, but if our intuition serves us as well as it has, it shall almost certainly be a government of some sort."
Other traders attribute the sharp move to the heavy liquidation of Comex gold futures, and futures exchange operator CME Group said it is "seeing continued volatility."
UBS analyst Edel Tully said gold's drop of nearly $100 in 24 hours from a new record is difficult to rationalize considering the week has many gold-positive variables, including the extraordinary move to set a floor for the euro-to-Swiss franc exchange rate.
Gold, however, has been benefiting significantly in recent months from demand as an alternative store of value amid turmoil in the financial markets. With risk appetite having improved Wednesday, demand for the yellow metal has weakened and "weak longs" have been flushed out, market participants say.
Spot gold fell as low as $1,827.44 an ounce during early European trade, almost 5% off Tuesday's new all-time best of $1,920.94 an ounce.
FuturesTechs director Clive Lambert said the shakeout in the gold market "backs up our somewhat cautious stance right now," and said that while long-term holders won't be worried about gold's slide from a new record high, the market does appear to be frothing up at its current elevated levels.
Among other metals, spot silver skidded 94 cents, or 2.2%, to $41.02 an ounce. Spot platinum was down $20, or 1.1%, at $1,832 an ounce, and spot palladium was off $3, or 0.4%, at $747 an ounce.
