Gold slump prolonged by sell-off pressure

Gold prices slipped to three-year lows as the precious metal continued its slide as the US economy showed fresh signs of strength and concerns eased about China's liquidity crunch.

The most traded gold contract on the Shanghai Futures Exchange (SHFE) plunged 6.7 percent last week, extending the previous week's 5.72 percent loss to 243.80 yuan ($39.72), or $1,235.43 per ounce. The January SHFE silver contract plunged another 5.95 percent last week to 3,839 yuan per kilogram.

Meanwhile, the August gold future on Comex in the US lost about 5.3 percent to end the week at $1,223.70 per ounce, despite a 1 percent rebound on Friday.

Gold hit a three-year low Thursday due to an accelerating sell-off by gold exchange-traded funds (ETF), according to commodities analysts from the Australian bank ANZ.

Cumulative holdings of gold ETFs fell by 45 tons, or 2 percent, from Wednesday to Friday.

"Proportionally, this is larger than the initial decline in ETF holdings in mid-April, the beginning of the gold rout. ETF selling is accelerating," the analysts wrote Friday.

From a technical perspective, the analysts believe a fall below the key support price of $1,150 per ounce could lead to much deeper lows, though the "sharpness of the decline does leave gold at risk of an equally sharp rebound."

Overall, the price of gold has continued to fall since hitting an all-time high of $1,921 per ounce in late 2011.

In base metals, the most traded SHFE copper contract shed 2.16 percent to fall to 48,580 yuan per ton over last week.