Gold continues to get hammered as institutional investors continue to sell their precious metal positions in order to raise cash to cover bad stock trades and other bad investments.
The reason they have to do this is because they leveraged themselves to make investments, and now lenders are calling their loans, forcing them to raise short-term cash. This is why the usual strength and safety of gold in times like these hasn't come about, as prices continue to be pressured downward.
On the other side of it, the U.S. dollar has been the beneficiary of this trend, as most commodities, including gold, is dollar-denominated, pushing the greenback up in circumstances which usually weaken it.
Since the underlying fundamentals remain the same, this will eventually correct itself, but because of the complexity of some of the financial instruments invested in, it's impossible to measure the amount of time it will take for all of this to unwind.
Once it does, things will start to react normally again, and the U.S. dollar will start to fall, while gold will again rise. Again though, the time frame is impossible to predict at this time.
Early today December delivery for gold dropped to $681 an ounce on the New York Mercantile Exchange, a $33.70 fall. That's the lowest since January 11, 2007. Later in the session gold rebounded to $708.70.
Gold could end Friday with the worst trading week in its history.