Gold tumbled below $1,400 an ounce, falling the most since 1980, after dropping into a bear market last week as optimism that a U.S. recovery will curb the need for stimulus cut demand for a protection of wealth. Silver, platinum and palladium tumbled.

Holdings in the SPDR Gold Trust (GLD), the biggest exchange- traded product backed by the precious metal, are the lowest in almost three years and hedge funds have cut bets on higher prices by 72 percent since mid-October. Futures slid 4.1 percent on April 12, taking losses to more than 20 percent since the record close in August 2011, and meeting the common definition of a bear market.

And:

An April 9 debt assessment by the European Commission said Cyprus had committed to selling about 400 million euros ($525 million) of "excess" gold reserves. In response to the disclosure, the Central Bank of Cyprus said it wasn't considering a sale. It owns 13.9 metric tons, according to the World Gold Council. That's valued at about $622 million.

"Some of the key pillars of the gold bull market look like they're suffering fatigue," Peter Richardson, an analyst at Morgan Stanley, said by telephone from Melbourne today. "The gold market's probably started to price in the prospect that beleaguered members of the euro zonemight be forced to sell gold to raise part of the funding, and there are much bigger holders in that category than Cyprus."

And:

"I love the fact that gold is finally breaking down because that will offer an excellent buying opportunity," Marc Faber, publisher of the Gloom, Boom & Doom report, said on Bloomberg Television's "Street Smart" on April 12. "The bull market in gold is not completed."

David Fuller's view We know that bear markets generally fall faster than bull markets rise, because the fear of being long and wrong is greater than the fear of missing out on a profitable advance, particularly if one has leveraged positions.

Gold's latest technical action has resembled a 'catch a falling knife' situation since last Friday and especially today. Consequently, the selling is somewhat climactic in the short term. We can assume that long positions have been significantly reduced and short positions mostly increased.

Nevertheless, while two big days to the downside have made gold considerably more attractive for long-term investors, including central banks which have been accumulating gold, they are unlikely to buy aggressively while there is speculation regarding sales by the central bank of Cyprus, and more importantly, some of Europe's larger indebted Southern European countries.

One eventually benefits from buying valued assets in small quantities during periods of forced selling. However, it is also prudent to wait until price action shows some evidence of support building before concluding that demand is about to regain the upper hand.

Before last Friday, some people were still buying gold hoping that the previous range lows dating back to September 2011 would hold. Therefore it would be premature to assume that gold's slump is now over, especially as people will be guessing about downside objectives between current levels and $1000.