London: Gold prices slid below $1,700 (Dh6239) an ounce in Europe yesterday as weaker-than-expected Eurozone economic data lifted the dollar versus the euro, and as appetite for assets seen as higher risk, like stocks and commodities, suffered after China set its lowest annual growth target in eight years.
Spot gold hit a low of $1,693.99 an ounce and was down 0.9 per cent at $1,697.09 an ounce at 1037 GMT, while US gold futures for April delivery were down $11.20 an ounce at $1,698.60.
Spot prices fell 3.9 per cent last week, their worst weekly performance since mid-December, after Federal Reserve chairman Ben Bernanke gave no further hints, in a key speech, of a third round of quantitative easing in the US.
"Markets had really hoped for QE3, and that did create a plunge for gold, because all of a sudden traders and investors abandoned risky assets, we've seen the US dollar strengthening and stock markets [easing]," said Peter Fertig, a consultant at Quantitative Commodity Research.
Although extreme risk aversion was a key factor lifting gold last year, at a time when the dollar was strengthening, it has since reestablished its usual inverse relationship to the US unit as investor appetite for the dollar as a safe haven outweighed that for gold, and as panic in the markets subsided.
From a technical perspective, analysts said gold is vulnerable to further losses after last week's rout, particularly if prices break through $1,690 an ounce.
Gains in the dollar, which make commodities priced in the US currency more expensive for holders of other currencies, are pressuring the metal.
The US unit strengthened as the euro and growth-linked currencies fell yesterday, undermined by concerns over Greece's progress on completing a huge debt restructuring deal and poor Eurozone economic data, although dealers said the dollar was ripe for some profit-taking.
Meanwhile European shares fell as China's move to set its lowest annual growth target in eight years and uncertainty surrounding Greece's bailout prompted investors to sell nominally higher-risk assets.
German Bund futures hit record highs after Eurozone services sector PMI data missed expectations and as nerves grew before a Thursday deadline for investors to voluntarily take part in Greece's debt swap deal.