The dip below $1,400 an ounce marked gold's lowest levels in more than two years.
The selloff also has triggered a negative reaction across commodities markets.
May crude oil futures dropped $2.58 to close at $88.71 a barrel on the New York Mercantile Exchange.
"There has been no single fundamental catalyst for the panic selling in the gold and silver markets," Jim Wyckoff, senior analyst at Kitco.com, wrote in a note. "But the fear in the commodity trading world is pervasive Monday morning, which has most commodity futures markets and world stock markets under selling pressure."Veteran gold and commodities analysts were calling the Friday and Monday drop a historic event. "In 40 years of watching gold I have not seen anything like this," George Gero, precious metals strategist at RBC Capital Markets, wrote in a note. "The continued sharp setback is due to margin calls, risk managers prompting cash raising, and bouts of bargain hunting as some begin to take longer term positions." As for Monday's action, it was difficult for funds and individuals to find the confidence to jump back into the gold market. The CME Group said late Monday that it increased the deposit for an initial account on gold futures to $7,040, up from the previous amount of $5,940. The CME also said it increased margins for silver, platinum and palladium. Gold ETFs tumbled on Monday. SPDR Gold Trust (GLD) was off 8.8% at $131.31, while iShares Gold Trust (IAU) lost 8.9% to $13.19. Gold mining stocks also took a huge hit on Monday. Shares of Barrick Gold (ABX - Get Report) dropped 12.6%, and the junior mining ETF Market Vectors Junior Gold Miners (GDXJ) skid 12.5%. -- Written by Joe Deaux in New York. With additional reporting from Antoine Gara >Contact by Email. Follow @JoeDeaux