Gold slumped anew on Monday, racking up its worst two-day loss in 30 years, and investors dumped stocks and other commodities after weaker-than-expected Chinese data raised concerns about the global economic outlook.
Gold dragged other metals lower as its price plunged to a more than two-year low. Oil fell towards $100 a barrel, while Wall Street stocks were down more than half a percent.
Spot gold dropped as much as 8 percent on Monday alone, accelerating losses in the late morning to hit a low of $1,356.85 an ounce. In the last two sessions gold has fallen nearly 13 percent, making for the worst two days since late February 1983.
Gold was recently at $1,363.51, down 7.8 percent. Strategists have cited various reasons for gold's decline, including official selling from central banks and the already sharp correction that has caused short-term investors to flee the asset.
"The mass liquidation in gold is feeding on itself and pushing prices of the yellow metal, possibly well below speculators' entry points. It is rolling over across the entire commodity complex as is typical with any period of liquidation," said Andrew Wilkinson, chief economic strategist at Miller Tabak & Co.
China's recovery unexpectedly stumbled in the first three months of 2013, as it reported its annual growth rate eased to 7.7 percent from 7.9 percent in the final quarter of last year. Economists had forecast 8 percent growth.
Industrial output in China in March also undershot expectations and added to investor sensitivity after recent disappointing economic data out of the United States.
A U.S. regional manufacturing report on Monday showed the pace of growth slowed, the latest data to suggest the world's biggest economy lost some steam heading into the second quarter.
"The growth numbers out of China are absolutely crucial for commodities and the numbers that came out are significantly worse than people were expecting," said Nic Brown, head of commodities research at Natixis in London.
"China makes up 40 percent of demand for base metals and all the growth in demand for oil is coming from the developing world, so to see weakness in China is bad for commodities generally."
Last week Cyprus revealed it would sell around 400 million euros worth of gold to help plug its finances and the move has sparked suggestions that larger countries in the region could use the move to cash in on some huge jumps gold has seen over the last decade.
Traders also cited concern that the Federal Reserve might reduce U.S. monetary stimulus towards the end of the year.
"We are entering a phase of additional long liquidation by ETF investors and short-selling from hedge funds, which will continue in the foreseeable future," Saxo Bank senior manager Ole Hansen said.
Brent crude futures dropped more than $2 to $100.27 as the disappointment stirred the already-festering global recovery concerns. U.S. crude lost more than $3 to $88.15.
U.S. stocks also fell for the second straight session, weighed by the disappointing data both domestically and abroad.
"None of the economic data has been very good for the last couple of weeks. When you look at the whole scope of data, it looks like we have been going into a slowdown here," said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont.
"I wouldn't say this is over yet, but there are enough indicators out there to really indicate that investors should approach this market with a degree of caution which doesn't seem to exist right now."
The Dow Jones industrial average .DJI dropped 86.82 points, or 0.58 percent, to 14,778.24. The Standard & Poor's 500 Index .SPX fell 11.92 points, or 0.75 percent, to 1,576.93. The Nasdaq Composite Index .IXIC gave up 27.18 points, or 0.82 percent, at 3,267.77.
The FTSEurofirst 300 .FTEU3 was down 0.7 percent and MSCI's world share index .MIWD00000PUS, which tracks stocks in 45 countries, lost 0.9 percent.
The yen rose as traders sold riskier investments funded by the cheap Japanese currency. The dollar fell 0.5 percent to 97.93 yen, having dropped as low as 97.57 yen on Reuters data in Asian trade. It has retreated from a four-year high of 99.94 yen on Thursday, and hefty resistance is expected at 100 yen.
The euro fell 0.6 percent to 128.22 yen, its lowest in a week and down for a second straight day. Last week, the euro touched 131.11 yen, its strongest since January 2010.