Gold fell to a new near three-year low point on Friday, hit by receding inflation fears, upbeat US economic data, a strong dollar and expectations of an end to US quantitative easing stimulus, analysts said.
The precious metal -- whose twin drivers are jewellery and investment demand -- has seen its value wane recently particularly in response to a strong greenback, which makes dollar-priced gold more expensive for buyers using rival currencies, weighing on demand.
Gold dropped under $1,200 an ounce on Thursday for the first time since August 2010. On Friday it extended its loss to reach $1,180.50 in Asian trading hours -- which was the lowest level since August 3, 2010.
Gold has lost a quarter of its value in the second quarter, which ends on Friday. It is the heaviest quarterly loss since the early 1970s, according to analysts at Commerzbank.
Traditionally a hedge against inflation, gold has dived along with other metals prices also on fears over the US Federal Reserve ending its multi-billion dollar quantitative easing stimulus. Many investors argue that QE fuels higher inflation.
"Investors are dumping gold because prospects for the metal are tarnished by a stronger US economy, which bumps up the US dollar," said Ishaq Siddiqi, an analyst at traders ETX Capital.
"The dollar has suffered a prolonged period of weakness due to the Fed's ultraloose money programme, quantitative easing," he told AFP on Friday.
"With now that coming to an inevitable end, investors are pulling their cash out of gold and parking it into more growth-focused assets which are geared to a US recovery; so US dollar, domestic US equities or European equities exposed to the US recovery."
Upbeat US economic data published Thursday fanned expectations of an end to the Fed's stimulus, despite assurances that the US central bank would not wind up its QE policy too soon.
Gold had rocketed in September 2011 to a record peak of $1,921.15 an ounce, as the metal soared on the back of its safe-haven status amid fears of a new world recession following the 2008 global financial crisis.
Gold stood at $1,204.60 a ounce on the London Bullion Market Friday after recovering from its fresh lows.
"The exorbitant rise in gold seems to have well and truly hit the buffers after losing over 50 percent of all the gains seen off the back of the 2008 crisis," said analyst Joshua Mahony at traders Alpari.
Commodity makets have been spooked ever since Fed Chairman Ben Bernanke last week suggested that the US central bank could begin reducing its stimulus programme later this year and wind it up completely by mid-2014.
The Fed is currently pumping out $85 billion a month into the US economy via bond purchases.