Gold and silver prices plunged for a second day on Friday in one the worst selloffs since the 2008 financial crisis that signaled an end at least in the near term to the long rally in precious metals.
Bullion and gold futures fell 6 percent and silver tumbled 14 percent as global recession fears made investors treat precious metals like any commodity, ignoring their safe-haven appeal that once made them a must-have in times of trouble.
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Adding to Thursday's losses, gold is down almost 9 percent over the last two days, while silver has lost nearly 25 percent. In the case of gold particularly, it was the third-worst daily loss in the past 20 years.
Traders said talk of hedge fund liquidation, possible sale of precious metals to cover losses in other markets and margin calls against long positions added to the downward pressure.
``We're making new lows and the bull case for gold is on pause for the near term,'' said Adam Klopfenstein, senior market strategist for precious metals at Lind Waldock in Chicago.
``In the near-term, the flight-to-quality interest in owning gold is also out of the window as people are not interested in buying it even in the face of fears in the economy. Until it stabilizes, I'm staying out of this market.''
By 1:15 p.m. EDT (1715 GMT), the spot price of bullion was down 6 percent at below $1,631 an ounce, after falling to a session low under $1,628.
U.S. gold futures' benchmark December contract was also down 6 percent to trade under $1,635 after a session low below $1,632.
Spot silver was down to a seven-month low of $30.53 an ounce, versus Thursday's last trade at $35.36.