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Gold dropped 3 percent, as a sudden price tumble in the futures market shattered investor confidence, sending the metal to its biggest one-day drop in more than two months.
Prices also came under pressure as tensions with Syria eased and US data reinforced expectations that the US Federal Reserve will this month start to unwind its monetary stimulus that has bolstered gold prices for the past four years.
Silver sank over 5 percent and platinum group metals were lower after gold’s big jolt lower early in London trading.
US gold futures trading was momentarily halted at 2:54 a.m. EDT (0654 GMT) by CME Group’s Stop Logic mechanism. In the one minute around the 20-second trading pause, gold prices slid $10 with an unusually heavy 4,300 contracts changing hands, Reuters data showed.
“The block trade of futures and the $10 gap down spooked the market right out of the gate,” said Jeffrey Sica, chief investment officer of Sica Wealth Management, which oversees more than $1 billion in client assets.
The losses were all the more significant as investors also sold the dollar and US equities.
Sica said that some sovereign wealth funds and hedge funds opted to reduce their gold positions after the sudden decline, extending the gold market’s weakness later in the session.
Stop Logic is aimed at preventing large price movements from cascading stop-price orders, an order to sell or buy a security when it reaches a particular price. It also allows participants to provide additional liquidity.
Spot gold dropped 3 percent to $1,325.55 an ounce by at 3:01 p.m. EDT (1901 GMT), for its biggest one-day fall since June 26. Earlier, the metal hit $1,324.24, its weakest since Aug. 15.
For the week, bullion is on track to slip nearly 8 percent for its biggest weekly decline since the last week of June.
Technical selling further pressured prices after the metal broke through its 100-day moving average at $1,355 an ounce and its 50-day moving average at $1,335, traders said.
US gold futures for December delivery settled down $33.20 an ounce at $1,330.60, with trading volume at about 10 percent above its 30-day average, preliminary Reuters data showed.
Heavy selling in precious metals came as there were few new developments in the Syrian crisis after Syria accepted a Russian proposal earlier this week to give up its chemical weapons. On Thursday, Syria applied to sign onto the global ban on chemical weapons. 
In addition, while the latest weekly jobless claims data fell, the drop was clouded by a processing issue, making it difficult to get a clear reading on the health of the labor market.
Markets outside of precious metals were not moving sharply on the news. The US dollar was flat and crude oil futures rallied 1 percent.
The Fed’s FOMC is set to release a policy statement at the end of its two-day meeting next Wednesday.
Consensus is building among analysts that the Federal Open Market Committee next week could begin to slash its $85 billion monthly bond purchases. However, the opaque jobless claims data and disappointing US nonfarm payrolls data last week complicate an otherwise optimistic economic outlook.
Among other precious metals, silver was trading down 5.4 percent at $21.92. It has lost 8 percent so far this week. Platinum dropped 2 percent to $1,437 an ounce, while palladium fell 0.3 percent to $688.47 an ounce.

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