BENGALURU (REUTERS, BLOOMBERG) - Gold fell below the USUS$1,900 per ounce level on Wednesday (Aug 12) as a resurgent US dollar prompted investors to reassess their positions after a record-breaking price rally.

Spot gold declined as much as 2 per cent to a near three-week low of US$1,872.19, resuming its free fall after a brief hiatus in early trade. It was down 1.1 per cent to US$1,889.59 by 0330 GMT, extending losses after a 6 per cent plunge on Tuesday.

US gold futures slid 2.4 per cent to US$1,900.

Silver too joined the slide, falling 2.8 per cent to US$24.11 per ounce after a 15 per cent slump in the previous session. Platinum lost 1 per cent to US$920.86 and palladium eased 0.4 per cent to US$2,082.90.

"It looks like some of the euphoria is coming out of the gold market," with a test of support around US$1,800 now looking possible, IG Markets analyst Kyle Rodda said. "A lot hinges on US yields and the factors driving them at the moment. Also, dollar's strength will be something very important to watch over the next few days and weeks."

A jump in US Treasury yields helped the dollar extend its winning streak, making gold more expensive for those holding other currencies. Higher yields also increase the opportunity cost of holding non-yielding gold.

Gold suffered its biggest one-day drop in more than seven years on Tuesday as equities surged and the dollar firmed. However, growing uncertainty about a US stimulus deal weighed on Asian stocks on Wednesday.

Bullion's gains for the year now stood at about 25 per cent, as investors buy the metal as a hedge against a coronavirus-driven slowdown and fears of currency debasement as central banks flood the economy with money to ease the blow.

With central bank policies likely to remain "loose for the foreseeable future," gold could move back towards US$2,000, said ING analyst Warren Patterson.