Gold settled close to the psychologically key level of $1,200 an ounce ending the day at $1,211 as investors continued their relentless selling into a ninth straight session, betting on the Federal Reserve will curb its bond buying.
Bullion reversed small earlier gains triggered by a weaker dollar as selling offset tentative signs of bargain hunting. Investors have been shifting money into equities.
Without physical demand to offset the exodus from exchange-traded funds and institutional selling, gains were temporary, traders said. Buying in top consumers India and China has not picked up as much as it did in the mid-April selloff.
"Bargain hunters are reluctant to act for now," said George Gero, precious metals analyst at RBC Capital Markets Global Futures, in New York. "Wherever investors look, there seems a new negative."
Losses accelerated when stop-loss orders were triggered as prices pierced previous support levels.
For now, the market brushed off comments by two influential Fed policymakers who sought to dissuade investors that monetary accommodation was fading any time soon, each going so far as to say markets have misinterpreted the U.S. central bank's intentions.
Gold's safe-haven appeal has been severely dented since Fed Chairman Ben Bernanke said last week the U.S. central bank plans to start scaling back its $85 billion monthly bond purchases in the next few months. That would support an increase in interest rates, making gold less attractive.