The Category 2 hurricane was packing sustained winds of up to 110 miles per hour (175 kph), down from 140 miles per hour (225 kph) earlier in the day, but remained a dangerous storm, the forecasters said. Hurricane force winds extended up to 60 miles (95 km) from its center.
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The low-lying archipelago has a total area of only 21 square miles (54 sq km), and the hurricane center warned that once the eye had passed, the islands would still be battered with damaging winds and a life-threatening storm surge.
Flooding was reported in some areas and many banana trees had been knocked over. The islands' only power company, Bermuda Electric Light Co. (BELCO), reported nearly 31,000 customers were without electricity, out of 36,000 metered connections.
"Right now, where I am, we are hearing rain lashing at the walls and windows, which are starting to leak, and intense gusts of wind pounding the building, making the glass pulsate," said Susan McGrath-Smith, spokeswoman for BELCO, who was riding out the storm at the company's headquarters with her two dogs, Marley and Abby.
"We have also heard transformers explode outside," she added.
Gonzalo peaked on Thursday as a Category 4 hurricane with 145 mph winds (230 kph), and is expected to continue weakening throughout Friday and into the weekend.
Bermuda, a tourist destination and affluent insurance industry hub about 640 miles (1,030 km) off the coast of North Carolina, was still recovering from Tropical Storm Fay, which swept over the islands early on Sunday with near hurricane-force winds of 70 mph (110 kph), and later turned into a hurricane.