The gold price fell by as much as $88 or more than 5% on Friday crashing through the $1,500 an ounce level and spreading panic among gold bugs.

Market watchers were also scratching their heads trying to find reasons for the massive dumping of the yellow metal which sent the price plunging to a level last seen in July 2011.

The gold price is down 10% this year and Friday's sharp decline dragged it into official bear territory, defined as a 20% decline from a high ($1,909 intra-day in August 2011).

Certain technical support levels – not to mention the psychologically important $1,500 level – were breached but even the chart watchers were surprised by the depth of the sell-off.

Cyprus's decision to sell gold to stay afloat were cited as a bad signal for the market, but the numbers were so low that it could hardly impact the gold trade in any significant way.

Rumours were also floating around that Merrill Lynch sold 4 million ounces at the start of the trade in New York and of course the stronger dollar on Friday would hurt the price of gold.

But none of this is enough to explain Friday's meltdown.

The day's dramatic fall is probably just the logical conclusion to the steady build-up of negative sentiment in the gold market in 2013.

There has been a flood of bad news for gold supporters this year:

• Increasing evidence that gold is fairly priced


• Gold's safe haven status is lost.  No level of geopolitical tension – North Korea, Syria, Iran – could scare people into gold


• Growing consensus the US is closer to ending its ultra-loose monetary policy


• The currency wars and Japan's quantitative easing nuclear bomb did not affect gold as expected


• Risk-taking making a comeback and diverting money away from gold


• Physical demand not as strong as thought as gold hits record highs in other currencies


• Accelerating outflows from gold-backed exchange traded funds

On Friday the dam wall holding back that flood broke.

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