Gold is on course for its worst quarter since at least 1968, having fallen below 1,200 US dollars an ounce (£787) for the first time since August 2010.
The plunge is bad news for the Bank of England and fellow central banks around the world as it has been decimating the value of their gold reserves.
The Bank of England is estimated to have seen £4 billion wiped from its gold stocks in the recent rout, according to options trading firm Banc de Binary. It said the Bank's gold holdings have fallen from around £12 billion to £8 billion since the peak at the height of the gold price bubble.
Gold soared to an all-time high of 1,920 US dollars (£1,259) an ounce in September 2011, as investors bought into the metal to protect against bank failures, sovereign debt defaults and soaring inflation eroding cash investments.
Central banks worldwide have seen an eye-watering 655 billion dollars (£429 billion) knocked off the value of their gold, with the total value of holdings now worth 1.27 trillion (£833 billion), according to Bank de Binary.
Gold has been hit by recent comments from the US Federal Reserve confirming it will start tapering its economic stimulus drive later this year - as long as the economy continues to show signs of improving. It marks the end of a remarkable decade-long bull run, spurred on after the financial crisis when investors began piling into gold as a safe haven asset.
Traders fear gold prices have further to fall, but Alasdair Macleod, head of research at GoldMoney, said the precious metal remained a solid investment amid global volatility.
He said: "The combination of a gold price that has effectively halved and an increase in the reasons to buy it tell us that it is undervalued to a truly extraordinary degree."