Gold prices drop for a sixth straight day

Spot gold was flat near 1,244 dollars an ounce by midnight Tuesday GMT, hitting a four-month low. The six-day decline is the precious metal's longest losing streak in nearly seven months as investors pull money out for equity investments.

Cash is pulled from gold to the equity market on positive Chinese and US factory data. Gold is often seen as a safe-haven alternative investment to riskier assets such as stocks. Dropping gold prices usually drive up physical demand for gold in top consumer countries like China. But this time, the situation is different.

"We see a significant drop in gold prices. That usually triggers gold buying in China, especially for investment purposes. But this dragon boat festival holiday is different, as Chinese investors are gambling that the gold prices will continue to tumble. There's a strong bargain-hunting mood in the market," said Chen Tao, manager of China Gold.

Going forward, gold prices may continue to suffer downward pressure from the US tapering and Ukraine's political woes.

"The gold price rally we've seen earlier this year is a result of Ukraine's political turmoil. Now the tension is relaxing, and gold prices are losing the biggest upward support. This is a dominant factor. Besides, the US continues its tapering, which bodes well for the greenback's value, and as a consequence, dampens investors' appetite for gold," said Zhang Yinwu, metal trader of ICBC.

Analysts say gold prices may continue a downward trend in the short-term, reaching gold bullions' cost prices. Some feel prices might fall another 5 to 10 percent in the next couple of months.