The gold industry has fallen to its lowest level in two years, while wider commodity prices have also declined following disappointing Chinese economic data.
Gold has lost some of its gleam among small investors who once saw it as a financial salvation.
The price is down 15% in two days to approximately $1,400 (£914) an ounce, which counts as a serious reappraisal since it follows an 18-month period in which the price meandered between $1,600 and $1,800.
The fall marks the sectors worst two-day performance since 1983, ending a decade-long boom and entering bear market territory. The surprise dramatic collapse led a dip in other commodities and shares.
Before the drop, gold had climbed every year since 2001, as investors bought the metal both as protection against inflation and as a so-called safe haven. The precious metal peaked as lawmakers wrangled over raising the debt ceiling in the summer of 2011 and threatened to push the US into default.
Slowing demand from the weakening Chinese economy has been blamed after gloomy figures surprised markets - economic growth came in at an annualised 7.7% at the end of last year, well below the 7.9% economists had forecast.
Furthermore, a slowdown in inflation, combined with speculation the Federal Reserve is considering winding down its stimulus program, prompted investors to sell.
This means that the rate of US inflation is likely to fall, meaning investors have less reason to hold gold to avoid a corresponding decline in the value of cash investments.
Another drag on prices has come from India, the world's biggest buyer of gold bullion, which introduced a 50% import tax that has triggered a 24% fall in the amount of gold brought into the country in the first quarter of this year.
Gold mining company shares fell sharply as a result, with Fresnillo ending down 15%, and Randgold dropping 8.3%.
For more information on the gold market, see the latest research: Gold Market
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