Gold prices dropped sharply to a low of $1,826 per ounce Friday morning in London - 4.9% down on Tuesday's all-time high - while stocks and commodities also fell and European government bonds gained.
Going into the weekend, the gold price at Friday lunchtime looked headed for 3.3% weekly loss after speeches from US and European policymakers did little to calm market nerves.
"Gold prices enjoyed a white-knuckle ride this week," says a note from French investment bank Natixis.
"There are very good reasons why people long on gold may be taking profits," Jesper Dannesboe, analyst at Soci'et'e G'en'erale, told Bloomberg this morning when asked about Friday morning's sudden drop.
Dannesboe cited a stronger dollar, as well as the technical explanation that gold prices are forming a so-called "double top" - an M-shaped-pattern than some technical analysts view as bearish.
"The swings have been quite dramatic in the last two weeks between $1,704 and $1,920," adds a report from bullion bank Scotia Mocatta.
"We do not [however] expect sizeable liquidation unless $1,704 breaks."
Silver prices meantime fell to $41.37 per ounce - 4.3% down for the week so far.
European stock markets fell Friday morning. In London the FTSE was down 0.6% by lunchtime, while the German DAX was off over 1% - and down 7.6% since the start of the month.
The Euro Stoxx 50 index of leading eurozone shares meantime was down 1.3% - also making a 7.6% loss for the month so far.
"The economic situation is getting worse," says Markus Steinbeis, head of equity portfolio management at the Pioneer Investments in Unterfoehring, Germany, which manages around $221 billion.
"It depends more than ever on what policy makers will do. As long as economic indicators remain as they are right now and emerging markets are tightening their monetary policies, the upside should be limited."
On the US markets meantime, the correlation among the largest 250 stocks in the S&P 500 has reached 81%, research from JPMorgan shows - suggesting stocks prices are moving together in response to wider market conditions rather than individual company fundamentals. This is the highest level since the stock market crash of 1987, the Financial Times reports.
President Obama announced his "jobs plan" on Thursday, exhorting Congress to pass $447 billion in proposed spending and tax cuts. Press reports ahead of the announcement predicted the package would be worth $300 billion.
"The plan reflects the government's deep concern about the economy," adds Duan Shihua at Haitong Futures in China.
"[It raises]the real possibility of another round of quantitative easing, which is supportive of gold."
"Markets have been uninspired [by the plan]," adds Marc Ground, commodities strategist at Standard Bank.
The US Federal Reserve meantime will "do all that it can to help restore high rates of growth and employment in a context of price stability," Fed chairman Ben Bernanke said in a speech on Thursday.
"The Federal Reserve has a range of tools that could be used to provide additional monetary stimulus...[we] will continue to consider those and other pertinent issues, including, of course, economic and financial developments, at our meeting in September."
The Federal Open Market Committee is next due to meet Sept. 21-22, with the meeting extended to two days rather than the usual one.
Here in Europe, the European Central Bank has "delivered price stability impeccably," outgoing ECB president Jean-Claude Trichet told reporters on Thursday.
Trichet was responding to the suggestion that some German economists are privately calling for a return to the deutsche mark, as well as comments from German opposition leader Sigmar Gabriel that the ECB's purchases of eurozone government debt was putting "the stability of the currency in danger".
"It is not by chance that we have delivered price stability," said Trichet. "We were asked [by eurozone governments] to decrease rates in 2004...we said 'No'."
Over in China - the world's second largest gold bullion consumer - industrial production growth slowed to 13.5% year-on-year in August - down from 14.0% a month earlier - according to official data published Friday. Chinese consumer price inflation meantime fell to 6.2% last month - down from 6.5% in July.
Former Libyan leader Muamar Gaddafi sold 29 tonnes of gold bullion - 20% of the country's reserves - during his final weeks in power, according to Libya's new central bank governor.
"The gold was liquidated in order to pay salaries and to have liquidity, in Tripoli in particular," said Qassem Azzoz on Thursday.
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Ben Traynor is editor of Gold News, the analysis and investment research site of gold ownership service BullionVault. He was formerly editor of the Fleet Street Letter, the UK's longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.