Gold plunged more than $US100 per ounce overnight to $US827 ($NZ1389) - its largest percentage decline in 25 years - as investors cash up amid turmoil sweeping world markets.
Gold, historically a safe haven investment in troubled times, was expected to spike well above $US1000 per ounce, but present sharemarket volatility has seen it sold off by investors building up cash supplies.
ABN Amro Craigs broker Peter McIntyre said, in light of the present financial crisis and resulting fears of a worldwide recession, soft and hard commodity prices, ranging from foodstuffs to metals, were falling with the expectation of diminishing demand.
"Any money taken off the table is pushed into the banks. Anything that can be converted to cash is being done," Mr McIntyre said.
Late last week, general commodity prices experienced record slumps, he said.
Gold, which hit a record $US1033 in March, dropped 11%, falling from $US931 to $US827, compared with an 8% slump in February 1983.
The London Metal Exchange yesterday recorded falls in the price of copper, aluminum, lead, zinc, nickel and tin, while gold started to regain some losses and head towards $US850.
Butter was down 13% on a year ago, and whole milk and skim milk powders were down 36% and 22% respectively, Mr McIntyre said.
Oil has fallen to almost half of its record price of $US147, set in mid-July, with a more than 10% decline yesterday seeing it trade around the $US77 mark.
