Gold has been hit hard by central bank actions in the United States and Japan, falling to four-year lows and further eroding the value of gold producers.
Investors had already driven bullion down to about $1,200 (U.S.) an ounce this fall in anticipation that the U.S. Federal Reserve Board would stop pumping dollars into the economy.
Then this week, the Fed ended its controversial economic stimulus program, a move that sets the stage for the central banker's first interest-rate hike since 2006. That, combined with the Japanese central bank's surprise decision Friday to further bolster its economy with more bond buying, sent the U.S. dollar soaring.
Bullion dropped to $1,171.60 an ounce on Friday, the lowest it has been since July, 2010.
"Any time the U.S. dollar strengthens, it's bad news for gold," said Bart Melek, head of commodity strategy with Toronto-Dominion Bank. "Investors are not interested in gold at this point."
Rock-bottom U.S. interest rates, combined with the Fed stimulus program known as quantitative easing drove gold to a record high of $1,921 in September, 2011.
"It was really quantitative easing and all the liquidity the Fed put into the U.S. economy that caused gold to move to an all-time high," said Patricia Mohr, commodity market specialist with Bank of Nova Scotia.
The chance of a U.S. rate hike is expected to drive investors away from gold and into interest-bearing assets such as U.S. Treasuries.
The price of gold is entering into dangerous territory for miners, particularly those that spend about $1,150 to produce an ounce of bullion. A sustained drop could force some producers to shutter their mines.
Canadian gold companies, already under duress given the slump in commodity prices, were pummelled. This week, Kinross Gold Corp. fell 20 per cent to $2.41 (Canadian) a share, Yamana Gold Inc. lost 30 per cent to $4.49 and Goldcorp Inc. lost 15 per cent to $21.15.
"It's a tough day in the gold equities," said Steve Letwin, CEO of Iamgold Corp., which dropped 20 per cent this week to $2.14 a share.