The eight-day rise in gold prices came to a halt on Tuesday as Japanese investors, who have been the biggest buyers, decided the 8 per cent price increase since the start of December meant it was time to book profits. This caused prices to decline and left the metal vulnerable to further price falls.

Martin Stokes, vice-president of commodities at JPMorgan, said it was difficult to pinpoint the precise catalyst that prompted the decline. “Perhaps it was the small, psychologically important reversal of the dollar/yen rate under Y120, perhaps the increased margin rates announced [on Monday] on the Tokyo Commodity Exchange [Tocom] or perhaps it was just that the market had enjoyed so many up-days without a break.”