Gold slumped below $US1300 an ounce on Thursday, its lowest point since 2010, on the back of news from the US Federal Reserve suggesting an earlier than expected end to stimulus measures.
ANZ said the fundamental drivers of gold were unchanged, though the continuation of current themes that had seen the metal drop 23% since January were exacerbated by the move through the key psychological level of $1300/oz.
Analysts said the current sell-off was seen was mature and approaching an end, though signs of completion were not apparent.
"This implies that yet further slippage is likely until a base can be confirmed," ANZ said.
"The current $1245-1300/oz would be a technically ideal area for such a base to develop.
"Therefore, near-term price action should be closely monitored in order to detect further signs of a potential base. Though keenly awaited, it is definitely not apparent as yet."
Meanwhile, Macquarie Private Wealth believes the Fed's timetable for winding up quantitative easing is too ambitious, providing support for gold and silver.
"But absent a substantial U-turn by the Fed, both metals need to face up to life without QE."
Macquarie flagged more outflows from exchange-traded funds.
"The most liquid fund of all, the GLD gold ETF in New York, currently has just under 1000 tonnes, down from a peak of 1353t in December 2012," Macquarie said.
"ETF selling needs to be absorbed by changes in other sectors of supply and demand.
"The 500t seen so far has largely been taken up by retail consumers in India and China, but there is a question mark over whether they have the capacity or desire to do so again, especially with the Indian government's hostile attitude to gold, without another large price fall.
"Of course what will be crucial is over what period we see ETF selling, and that could again be determined by how quickly and steadily the US economic data improves."
Comex gold for August delivery closed at $1298.10/oz on Friday and spot gold was trading at $1295/oz at 11:30 AEST after hovering around $1299/oz at 8am AEST.
Despite a partial recovery in prices since Thursday, miners are being punished for a second day.
The S&P/ASX 200 was down 1.5% at 11:30am, while basic materials had fallen 2.8%, dragged down by gold miners, which slumped 5.5%.
Newcrest Mining hit a fresh nine-year low of $9.76, a drop of more than 5%.
Perseus Mining slumped 15.5% to 65.5c, Medusa Mining fell 14.8% to $1.35, Evolution Mining dropped 10% to 58c, Endeavour Mining lost 9.2% to 54c, St Barbara shed 7.8% to 44.2c and Resolute Mining was down 7.6% to 66.5c.
Kingsgate Consolidated was down 4% to $1.44, Regis Resources was down 3.7% to $3.11, Silver Lake Resources fell 3% to 66c and Alacer Gold dropped 1.2% to $2.43.
First published in MiningNews.net this morning.