NEW YORK/LONDON: Gold fell around 1 percent on Monday, extending last week's 7 percent slide as fears of a cash crunch in China spooked investors, and a slide in US equities prompted some to liquidate bullion to cover margin calls.Other precious metals including silver and platinum group metals also tumbled on global economic fears.
Gold hovered about $15 above a three-year low reached last week. The S&P 500 index, a US equities benchmark, dropped about 1 percent on worries about the US Federal Reserve's plans to end economic stimulus, and about a cash squeeze in China that could hurt the world's second-largest economy.
On Friday, bullion holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell a further 0.5 percent to the lowest in more than four years.
Analysts said physical buying of gold has not been enough to offset fund selling of gold exchange-traded products (ETP).
"Physical demand had previously absorbed the excess supply from disinvestment but ETP outflows could gain momentum from here. Much of the physical buying seen in April is unlikely to materialise again," said Suki Cooper, precious metals strategist at Barclays Capital.
Spot gold was down 1.1 percent to $1,282.74 an ounce by 4:01 p.m. EDT (2001 GMT). Bullion posted its worst weekly performance last week since September 2011 and pushed the price as low as $1,268.89. It is down 24 percent so far this year.
US Comex gold futures for August delivery settled down $14.90 to $1,277.10 an ounce, with trading volume about 25 percent below its 30-day daily average, preliminary Reuters data showed.
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