GOLD’S status as a safe haven for jittery investors was dealt a blow yesterday when profittakers caused its price to crash more than 3 per cent.

In London trade, gold fell nearly $15 to $436.15 per ounce, erasing most of its gains over the past four weeks.

At the same time the US dollar, whose weakness has been a principal factor in gold’s rise, rebounded to $1.9250 against sterling, compared with its 12-year low on Tuesday of $1.9507.

Gold is widely regarded as a hedge against the US dollar. Analysts said that the greenback’s recovery yesterday was because of renewed interest among buyers ahead of the holiday season.

However, gold traders were upbeat, pointing to the precious metal’s strong run since September, when it was trading at around $400. They said that investors remained predominantly gold-bullish and dollar-bearish, despite yesterday’s precious metals correction.

Many expect the gold price to return to 16-year highs by early in the new year. London-traded gold peaked at $456.75 last week.

Chartists have pointed to important technical support levels at $435 and $428, which had not been tested by yesterday’s sell-off.

Ross Norman, an analyst with TheBullionDesk.com, said: “It was a well-deserved and well-needed correction, which you can largely attribute to the US dollar.

“While the market had expected a year-end correction might be in order, the speed and scale of the fall will certainly have caught some traders wrong-footed, with the triggering of stops accelerating the decline.”

Gold was joined by other precious metals, whose values plummeted.

Silver was hit particularly hard, falling 11 per cent at one stage yesterday while platinum dropped to a six-week low and palladium eased more than 2 per cent.

Gold’s price crash was further fuelled by a substantial sell-off in the quantity of the metal held in the StreetTRACKS Gold Fund, a gold tracker fund that listed on the New York Stock Exchange late last month.

The fund attracted more than $1.3 billion in its first three days, in turn helping the gold price’s bull run.

Jim Wyckoff, a US-based analyst, said that despite gold’s big price drop, “no serious chart damage has yet occurred”.

Mr Wyckoff said that the gold market had been in an upward trend since the precious metal hit a low of $377.30 in May.

He said: “Importantly, prices had not seen a decent corrective pullback since early September and were overdue for a move like the one that occurred (yesterday).

“The only surprise with the pullback is that the move appears to have come in one fell swoop as opposed to a downside correction of several days.”

Meanwhile, crude oil futures slipped as a US government report showed a rise in distillate inventories that trumped a contradictory industry report.

Nymex crude for January delivery sank as low as $40.45 a barrel, its lowest level since July, before recovering to $41.35, down 11 cents.

In London, Brent crude was trading down 17 cents at $38.10 a barrel.

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