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Gold Prices Are Hammered on Worst Trading Day in 2014

Updated from 10:15 a.m. EDT with settlement prices

NEW YORK (TheStreet) -- Gold prices on Monday posted their worst intraday performance in 2014 as a negative year-end outlook on the yellow metal from bank analysts and strong bank earnings weighed on the asset.

Gold for August delivery at the COMEX division of the New York Mercantile Exchange slumped $30.70 to settle at $1,306.70 an ounce. The gold price traded as high as $1,340.90 and as low as $1,302.20 an ounce, while the spot price was dropping $33.10.

WATCH: More market update videos on TheStreet TV | More videos from Joe Deaux

Citigroup on Monday posted second-quarter earnings of $1.24 a share, which beat analysts estimates of $1.05 a share. The strong report boosted U.S. stocks.

"The triple-digit up move in stocks was the straw that broke the camel's back," RBC Capital Markets precious metals strategist George Gero said in a phone interview from New York. "Before the opening you saw Citi beat the earnings estimates, [causing a] big jump in the S&P 500 ... and that was enough of a catalyst to bring in sell stops."

Goldman Sachs global commodities research head Jeffrey Currie said he thinks gold, which is up more than 8% on the year, will end 2014 in negative territory.

"Gold will start moving lower once there is more confidence in the recovery, without significant inflationary concerns,” Currie told Bloomberg in an interview. Currie gave gold a price target of $1,050 an ounce -- that would be a 19.5% drop from the current level.

TheStreet noted on Saturday that many analysts are forecasting the second half of the year will cause more trouble for the yellow metal than the first half, when the price jumped 9.5%. 

"Looking ahead, we believe that gold's current shine is unlikely to last and the downtrend, which started in 2013, is likely to resume as we move into the second half of the year," Societe Generale wrote in a note on Friday.

Optimists on the metal said that prices will continue to drift higher on central bank actions and geopolitical concerns.

Gold investors will be listening on Tuesday to Federal Reserve Chair Janet Yellen's address to the Senate Banking Committee. Should Yellen reiterate the central bank's intention to keep interest rates low well after it expects to end monetary stimulus in October and should the Fed hold on to the assets purchased on its balance sheet since the 2008 financial crisis, traders may view this as supportive of gold and hold up the price.

Additionally, investors are waiting to see the next steps the European Central Bank takes to provide economic support to the euro zone.

Traders also are following any new developments in Iraq, where the militant group ISIS continues to carry out attacks mostly in the northern part of the country. Should ISIS carry out larger scale attacks in the oil-rich southern part of the country or lead an attack on Baghdad, gold prices may jump higher on its appeal as a safe haven against uncertainty.

Analysts warned, though, that geopolitical risks don't typically represent a fundamental shift in the gold market and therefore won't support prices as much as loose central bank policy.

Silver prices for September delivery dropped 55 cents to $20.91 an ounce, while the U.S. dollar index was unchanged at 80.18.

SPDR Gold Trust (GLD), the most actively traded gold ETF, was dropping 2.4% to $125.75 a share.

-- Written by Joe Deaux in New York.

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