Gold fell for a fourth straight session on Thursday to its lowest level since a 15% plunge in mid-April, after the US Federal Reserve signalled it would slow the pace of bond purchases later this year.
A scale-back of the $85 billion monthly asset purchases is likely to weaken support for gold prices, already down about 20% this year due to rapid outflows from exchange-traded funds and slowing demand in top consumers, India and China.
'I wouldn't be in a rush to say it's the end of gold,' said Amber MacKinnon, an analyst at Nomura Securities in Sydney. 'This is definitely a big turning point. But though we have seen some reasonable amount of stability in the US economy, there is still a long way to run.'
'Early next year will be pretty telling in terms of economic data. We'll have to see how unemployment reacts to any scale-back in bond purchases.'
Fed chairman Ben Bernanke said on Wednesday the central bank will continue to reduce the pace of purchases in measured steps through the first half of next year, ending purchases around mid-year if the US economy continued to show strength.
Until recently, gold - seen as a hedge against inflation - had gained as the global economy took a hit and central banks acted to boost their economies. Gold touched an all-time high of $1,920.30 in 2011.
Spot gold fell 0.3% to $1,346.61 an ounce by 0340 GMT, down more than 3% for the week. It touched $1,338.84 earlier in the session - not far off the lows in mid-April when gold fell the most in 30 years.
US gold fell over 2%, or $28, to $1345.8.
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell below 1,000 tonnes on Wednesday for the first time in 4 years.
'With the negative sentiment that we have in gold currently, we really do need to see a significant amount of physical buying in order to stabilize the market -which we are not seeing,' said Mark Keenan, cross-commodity research strategist at Societe Generale in Singapore.
SocGen lowered its forecast for gold earlier this week, saying prices will fall to $1,200 an ounce by the end of the year, mainly due to the Fed's expected pullback in bond buying.
Demand in India has fallen off since the government hiked the import duty on bullion. China demand has slowed from peak levels seen earlier in the year.
China's factory activity weakened to a 9-month low in June as demand faltered, a preliminary survey showed, heightening risks that a second quarter slowdown could be sharper than expected.