On Wednesday, gold (NYSEARCA:GLD) futures for June delivery, the most active contract, dropped $27.90 to close at $1,558.80 per ounce, while silver (NYSEARCA:SLV) futures for May fell 23 cents to finish at $27.65.

It was gold’s worst day of the year, as Goldman Sachs added to the recent negativity in the precious metal. The bank slashed its three-month target on gold to $1,530 per ounce, down from $1,615 per ounce. The forecast for the end of 2013 dropped from $1,600 to $1,450. In the longer-term, analysts cut their price target to only $1,270 per ounce in 2017.

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Goldman notes that gold prices have been unable to gain traction, despite the historic events taking place in Cyprus. “Over the past month, events in Cyprus have triggered a resurgence in Euro area risk aversion while US economic data has started to disappoint. Remarkably, gold prices are unchanged over that period, despite US 10- year TIPS yields back at their lowest level since late 2012, highlighting how conviction in holding gold is quickly waning. This is particularly visible at the ETF level with gold holdings continuing to decline quickly.”

Cyprus turns to gold for help…

Although gold has been in consolidation mode for over a year, it still serves as a financial asset for countries facing dire conditions. Cyprus, the small insolvent Mediterranean-island, has agreed to sell some of its gold reserves to raise around 400 million euros, according to Reuters. The funds will help Cyprus finance its bailout (bail-in) from international lenders. Cyprus will also raise another 10.6 billion euros from bank confiscations and junior bondholder losses.

In afternoon trading, the SPDR Gold Trust (NYSEARCA:GLD) fell 1.6 percent, while the iShares Silver Trust (NYSEARCA:SLV) dipped nearly 1.0 percent. Gold miners (NYSEARCA:GDX) such as Barrick Gold (NYSE:ABX) and Yamana Gold (NYSE:AUY) dropped 7.2 percent and 3.8 percent, respectively. Silver names such as Silver Wheaton (NYSE:SLW) and Endeavour Silver (NYSE:EXK) dropped 5.2 percent and 3.1 percent, respectively.

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Barrick Gold was hit especially hard as the Chilean court suspended construction of the miner’s Pascua-Lama gold and silver mine. Protestors claim the project is destroying glaciers and harming the water supply. Barrick also raised the projected cost of the mine from $8 billion to $8.5 billion.

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Disclosure: Long EXK, AG, HL, PHYS