Gold slid to a four-month low and headed for the biggest weekly drop since December in London as concern Europe's debt crisis is deepening strengthened the dollar and cut gold's appeal as an alternative asset.
Greece's political impasse following an inconclusive May 6 election has raised the possibility that another contest will have to be held as early as next month, threatening the implementation of austerity pledges.
Gold has erased almost all of this year's gain as the dollar reached a three-month high versus the euro. Other precious metals declined as commodities wiped out gains for the year and global equities retreated.
"Risk appetite for gold is simply not there, with players preferring the greenback at the moment," Andrey Kryuchenkov, an analyst at VTB Capital in London, wrote in a report. "Safe-haven gold buyers remain largely absent while bullion continues to trade in the same direction as riskier assets."
Bullion for immediate delivery fell as much as 1.3 per cent to $1,573.82 (Dh5,788) an ounce, the lowest price since January 3, and was at $1,582.22 in London.
Prices were down 3.7 per cent last week, the most since December 16. June-delivery futures were 0.8 per cent lower at $1,582.20 on the Comex in New York.
Gold at the morning "fixing," used by some mining companies to sell output, fell to $1,580.75 an ounce in London from $1,598.50 on Thursday afternoon. Yesterday's price plunge pared this year's gain to 1.2 per cent, after the metal advanced for 11 consecutive years. Gold reached an all-time high of $1,921.15 last September.