Gold prices were hammered Wednesday on reports that Saudi Arabian banks were unloading enormous amounts of the metal in London.
The reports of heavy selling brought chaos to the morning fixing session in London and triggered a sympathetic selloff in the United States.
On the Commodity Exchange in New York, gold tumbled $11.50 to settle at $364.10 an ounce, after losing about $11 in Europe. Gold had been as low as $360 on the exchange before rebounding somewhat.
In London, gold closed at $363.25, also off $11.50.
Republic National Bank in New York quoted a late bid for gold at $363.95, down $10.55 from late Tuesday.
The last time gold was near the $364 level was in October, according to William O'Neill, research director at Elders Futures Inc.
The market was shell-shocked by aggressive selling by the Saudi banks, traders said, estimating that more than 1 million ounces of gold changed hands Wednesday.
The sales were so dramatic that some traders said Saudi Arabia may be trying to signal its displeasure to Congress, which previously rebuffed its attempts to purchase armaments from the United States.
The Saudis also are believed to have been responsible for a similar sharp drop in gold prices two months ago, according to analysts and traders.