Gold plunged $144 an ounce today to its biggest two-day decline since 1983 as investors sold the precious metal amid declines in commodities of all types.
Losses today widened to 9.6 percent as gold fell to $1,357 per ounce at 4:23 p.m. ET on the spot market. With Friday's drop of 5.3 percent, the total two-day decline hit 14.9 percent. Stocks fell 1.8 percent as the Dow Jones average slid to 14,599.
As ABC Radio's Richard Davies reported this morning, the reasons for the plunge are linked to the rise in the stock market, the slow, steady improvement of the US economy and the recent strength of the dollar. Crude oil futures tumbled on global markets, down to less than $89 for West Texas crude, the lowest price since December, 2012. Silver was down and so was copper.
Last week Goldman Sachs issued a report predicting gold prices would tumble. Another factor is China's economy, which grew 7.7 percent in the first quarter, less than analysts expected and coming off a 2012 that showed the softest growth in 13 years.
"We have seen massive liquidation from all quarters - ETFs, funds, CTAs, specs and even Chinese and Indian physical buyers. This is a market that has only got one thing on its mind … get me out," David Govett, head of precious metals at Marex Spectron in London, told Reuters.
In a research report, Goldman Sachs said: "The decline in prices since last fall and our updated forecast suggests that the turn in the gold price cycle is likely already underway. As a result, although our U.S. economic forecasts point to modest near-term upside to gold prices, we believe that a sharp recovery in prices to our previous price forecast is unlikely."
"In fact, we suspect that if indeed our forecast for further declines in gold prices proves correct, the fall in prices could end up being faster and larger than we expect."
Gold had more than doubled since the beginning of the 2008 financial crisis and rose 30 percent in 2010 and 25 percent in 2009. In 2000 it was just $272 an ounce. It reached its all-time high of $1913 in August 2011.