Gold futures on the COMEX Division of the New York Mercantile Exchange tumbled three percent on Thursday as investors dumped risky assets, moving towards greater cash holdings amid concerns that European debt crisis is on the verge of escalating. Silver pared 6.9 percent.
The most active gold contract for December delivery plunged 54. 1 dollars, or 3 percent, to 1,720.2 dollars per ounce.
On Thursday, Spain was forced to pay the highest rate to sell its 10-year debt since 1997, just shy of the 7-percent mark seen as unsustainable, stoking fears that Europe's debt problems are escalating.
Meanwhile, the cost of insuring debt from France, Spain, Belgium and Italy all rose to record highs. Gold future plunged in a volatile session on Thursday, as traders and investors alike are liquidating their precious metal in order to raise cash.
"This is almost exactly the opposite in the normal thinking in trading gold during times of economic crisis. The European continent is facing its worst economic crisis since the World War II. This should be reason enough for a flight to 'safer haven'," said Mike Daly, a gold specialist with PFGbest here in Chicago.
Mike noted that "European and global investors are liquidating gold and silver to raise cash and are choosing the U.S dollar as their currency of choice recently."
Precious metals tumbled throughout the session, with silver shedding nearly 7 percent, after Fitch said the outlook for U.S. banks could deteriorate if the eurozone debt crisis is not resolved quickly.
Silver for December delivery plummeted 2.325 dollars, or 6.9 percent, to 31.497 dollars per ounce. Platinum for January delivery fell 50.1 dollars, or 3.1 percent, to 1,581.1 dollars per ounce.
