What Caused the Sudden Decline in Gold Prices?

From NBC News:

The two-day crash in the price of gold is one of the most devastating asset sell-offs ever witnessed on Wall Street, right up there with the stock market crash of 1987. What makes it that much worse is no one is exactly sure why it happened.
... It seems like every trader on Wall Street has a theory for the move. Most commonly cited are fears of central bank selling (especially Cyprus), exchange-traded funds liquidation, global deflation setting in, a weak yen strengthening the dollar, and mysterious hedge funds blowing up from margin calls.


... Many say there may not be a fundamental reason to pinpoint for the bullion crash. After all, the metal has no fundamentals like cash flows or dividends, so it is only worth what others are willing to pay for it. After a 13-year run, perhaps it was time for other assets like Treasurys and high-yielding stocks to gain favor among the safe-haven crowd.



"Commodities trade even more technically than other assets since it's futures driven," said Enis Taner, global macro editor for RiskReversal.com. The crash "was technical more than anything in my view."



Taner points to the $1,530 to $1,550 area for gold, which was support for the metal for almost two years. Once it broke below that, the rush for the exits started.



And that's where a new facet of this trade, which was not around in 1980, may have thrown fuel on the fire: ETFs. They give the average Joe access to the gold futures market and these less sophisticated investors may not have the same pain threshold or capital as institutional investors.

 Or maybe its fear of banks defaulting on gold contracts.