Gold Plunges to $1,775, Gold Shares Tumble

Gold futures extended their losses Thursday morning amid widespread liquidation in precious metals.  COMEX gold futures, per the December 2011 contract, tumbled by as much as $51.50, or 2.8%, to an intra-day low of $1,775.00 per ounce as of 11:15am ET.

The yellow metal’s sell-off put considerable pressure on gold shares, as the AMEX Gold Bugs Index (HUI) dropped 2.7% to 586.32.  The largest decliners in the HUI included Yamana Gold (AUY) and Harmony Gold (HMY), which dove 4.3% and 3.5%, respectively.

Weakness in the gold sector was fueled by a coordinated effort among several of the world’s largest central banks – including the Federal Reserve and European Central Bank (ECB) – to implement new dollar liquidity measures in order to offset shortages of U.S. dollars at euro zone banks.

Equity markets across Europe and the U.S. rallied on the news, along with the euro currency. The euro climbed to an intra-day high of 1.3936 against the U.S. dollar, while the Dow Jones Industrial Average (DJIA) jumped 94.64 points, or 0.8%, to 11,341.37 this morning.