Spot gold was at $1,385.18 last night, down more than 0.4 per cent.
Some traders believe the yellow metal might retest the two-year lows of $1,321.35 that it touched on 16 April 16, when it recorded the worst daily loss for 30 years.
In subsequent weeks gold began to recover, yet has returned to a bearish direction.
“Bullion’s price break below the psychological $1,400 an ounce level may introduce additional near-term pressure on gold. However, physical bullion demand is likely to pick up further, given the price drop, to help stem potential losses,” said James Steel, chief precious metals analyst at HSBC.
Rallying Wall Street stock indexes have hurt bullion’s appeal as an alternative investment this year, leading to hefty outflows from gold-backed exchange traded funds.
The largest gold ETF, the SPDR Gold Trust, reported a further 4.5 tonne-drop in its holdings on Wednesday to 1,047.14 tonnes – the lowest since March 2009.