Gold bullion prices fell 1.4% in less than half an hour to $1,638 per ounce Tuesday lunchtime in London - while stock markets also fell sharply - after investment bank Goldman Sachs announced a third quarter net loss of $393 million.
Gold has broken through resistance at $1,690 and may challenge the $1,700 level after last week's biggest weekly gain since early September. Many investors remain nervous that contagion in the euro zone may not be averted.
Gold prices climbed more than 2% following the start of trade in London on Friday - breaching $1,876 per ounce around lunchtime - after the publication of weak US jobs data. Nonfarm payroll data showed the US economy added no jobs in August
LCH.Clearnet have been considering allowing gold as collateral since October 2009 and a move by the CME and JP Morgan to allow physical gold as collateral may have made their plans in this regard more concrete.