Forex

Major precious metals have fallen fell sharply in Monday trading as part of a wide financial market sell-off that saw industrial metals, oil and equities all buckling under speculative selling from record highs.

"Obviously there has been talk of a much-needed correction in precious and base metals. And it is not just commodities -- forex and stocks as well," Stephen Briggs, analyst at investment bank SG CIB, said.

Gold slid as low as $685.00 an ounce, down 4 percent from $714.60 on Friday in New York, before bouncing to $692.25.

"This was caused by the falls on Wall Street [equities] last week. Now we've got a good old shake-out taking place, but it is just blowing the froth off it," an investment fund source said.

Silver fell as low as $13.10 an ounce, down 8.5 percent, then settled at $13.48, down from the late New York level of $14.33.

"Despite this weakness early today, it is still too soon to conclude that this signifies a reversal of the broad uptrend, and [the] next few days will be critical," Barclays Capital said in a daily report.

The dollar, under pressure for some time, was stronger on Monday, and this also weighed on commodities, which are denominated in the U.S. currency.

"That, in the short-term, is bearish especially for precious metals," Briggs added.

Traders said investment funds, which have been the drivers behind a two-year commodity-wide bull market, were uniformly selling on Monday.

Price falls took place in a jittery atmosphere, where talk swirled of some trading firms having suffered heavy financial losses in recent weeks, caused by heightened volatility and increased margin calls.

"You will get this sort of thing when markets are neurotic -- and people think there is no smoke without fire," the fund source added.

Prices under record levels Gold and silver are now substantially below last week's multi-decade peaks, and may well fall further, traders said.
26-year high

Gold hit a 26-year high of $730.00 on Friday, while silver reached a 25-year peak of $15.17 last week.

But despite the price falls, some analysts still see gold's bull run intact, with the upside price objective the talismanic 1980 peak of $850 an ounce.

Platinum, which spiked to a record high of $1,334 an ounce on Friday, also fell. Spot metal lost 3.5 percent falling to $1,265, then moved to $1,278, against $1,316 late in New York.

Palladium went into free-fall, shedding over 11 percent to hit $352. It was lately at $370.50 from $399.50

Refiner Johnson Matthey released its widely-anticipated annual review, saying the market is expected to register a deficit for the eighth year in a row.

Copper fell over eight percent and zinc nearly 10 percent Oil also fell , with U.S. light crude dropped $1.74 to $70.30 a barrel, extending losses of more than a dollar on Friday.