Gold plunges as global stocks crash

Gold fell to a five-week low on selling by investors holding the precious metal in exchange-traded funds after a slump in Asian and European stocks.

Gold for immediate delivery dropped $5.70, or 0.9 per cent, to $636.75 an ounce at 11:32 am London time. Earlier, it declined to $636.05, the lowest since January 23. Last week's 5.9 per cent decline was the biggest since July 21.

Bullion and platinum futures in Japan dropped the maximum allowed by the Tokyo Commodity Exchange, as the Nikkei 225 Stock Average fell the most since June. Investors who own gold in exchange-traded funds tracked by the World Gold Council sold about 0.6 per cent of their holdings last week.

"In this type of market, people get nervous,'' said Graham Birch, who helps manage about $8 billion in precious-metals equities at BlackRock Investment Management in London. "People are looking to put a bit of money back in the bank.''

Prices may drop to $630 in the next few days after the metal dropped below last month's low of about $643, said Phil Roberts, chief European technical strategist in London at Barclays Capital. "You don't want to catch a falling knife,'' he said.

Bullion in exchange-traded funds dropped to 19 million ounces, from 19.1 million ounces on February 23, according to the World Gold Council's Exchange Traded Gold website. Investors are able to buy and sell shares of the funds, which are listed on stock exchanges.

Gold-mining shares also fell. AngloGold Ashanti, the world's second-biggest producer, declined 3.5 per cent to 304.5 rand in Johannesburg. Gold Fields, the No 4 producer, dropped 3.1 per cent to 120.4 rand. Peter Hambro Mining, which mines gold in Russia, fell 1.2 per cent to 1,119 pence in London.

Silver slipped 31 cents, or 2.4 per cent, to $12.575 an ounce today. Platinum dropped $24.25, or 2 per cent, to $1,182.25 an ounce and palladium declined $9.50, or 2.7 per cent, to $337.50 an ounce.