Gold fell to its lowest in more than three months on Friday, ending the week 2 percent lower, as economic uncertainties led to heavy selling in gold and other investments perceived as riskier.

Bullion dropped further after posting its biggest one-day loss since 2008 on Thursday, hit by sovereign debt fears in Europe, and signs that economic recovery in United States and China has hit a rough patch.

On charts, gold is vulnerable to extending sharp losses to reach $1,020-1,030 an ounce if support at current levels fails to hold, and may face a deeper retracement below $1,000 if it breaks that level, technical analysts said.

The metal, however, could see support in the near term as investors bid up COMEX gold call options and gold miners’ stock prices, floor traders and fund managers said.

“Investors are looking to some large-cap gold stocks as a way to hedge currency unrest and potential debt default in Europe,” said Brian Hicks, co-manager of Global Resources Fund at U.S. Global Investors, which has over $2 billion in mutual fund assets.

Shares of the world’s largest gold producer Barrick Gold (ABX.TO) and No. 2 Newmont Mining (NEM.N) are about 4 percent higher despite weaker gold prices and broad-based equities weakness.

Spot gold fell to a low of $1,043.75, and was last at $1,062.25 an ounce at 2:38 p.m. EST, against $1,062.60 late in New York on Thursday.

Spot bullion is about 2 percent lower from last Friday’s close at $1,081.05 an ounce.

U.S. gold futures for April delivery on the COMEX division of the New York Mercantile Exchange settled down $10.20 at $1,052.80 an ounce.

Gold is extending losses after prices fell 4 percent on Thursday after European Central Bank chief Jean-Claude Trichet predicted rising fiscal imbalances over the euro zone economy, and that knocked the euro.

The euro fell to its lowest level against the dollar since May on rising risk aversion, as the cost of insuring the debt of some euro zone nations against default hit record highs on worries over their fiscal positions.

CRUDE PLUNGES, ETF REPORTS OUTFLOWS

Oil prices briefly tumbled below $70 a barrel, as the stronger dollar and data showing additional U.S. job cuts weighed on the market.

Earlier on Friday, U.S. data showed that nonfarm payrolls fell unexpectedly in January, but unemployment rate surprisingly dropped to a five-month low.

“Gold is going to show higher volatility until there is more of a trend established in U.S. economic recovery,” said Thomas Winmill, portfolio manager of Midas Fund. MIDSX.O

Investment in gold-backed exchange-traded funds was lackluster, with holdings of the world’s biggest, New York’s SPDR Gold Trust falling 5.8 tonnes or 0.5 percent on Thursday.

Silver also tumbled to its lowest since early September at $14.63, tracking losses in gold. It was later at $14.91 an ounce versus $15.23.

Platinum and palladium also hit 2010 lows at $1,444 an ounce and $379.50 an ounce respectively. Platinum was later at $1,471 an ounce versus $1,499.50, while palladium was at $394.50 against $406.50.

Source: REUTERS

We have listed some options for investing in gold through ETFs below:

LONG:

The investment (GLD) seeks to replicate the performance, net of expenses, of the price of gold bullion. The trust holds gold, and is expected to issue baskets in exchange for deposits of gold, and to distribute gold in connection with redemption of baskets. The gold held by the trust will only be sold on an as-needed basis to pay trust expenses, in the event the trust terminates and liquidates its assets, or as otherwise required by law or regulation.

The investment (GDX) seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the AMEX Gold Miners index. The fund generally normally invests at least 80% of its total assets in common stocks and American depositary receipts (ADRs) of companies involved in the gold mining industry. The fund is nondiversified.

The Funds (GDXJ) investment objective is to replicate as closely as possible, before fees and expenses, the price and yield performance of the Market Vectors Junior Gold Miners Index (the “Junior Gold Miners Index”). For a further description of the Junior Gold Miners Index, see “Junior Gold Miners Index.”

The objective of (SGOL) the newly listed shares is to reflect the performance of the price of Gold bullion, less the Trust’s operating expenses. The Trust is open ended and is designed for investors who want a cost-effective(1) and convenient(2) way to invest in Gold as well as diversify their Gold holdings.

The investment (UGL) will seek to replicate, net of expenses, twice the performance of gold bullion as measured by the U.S. Dollar p.m. fixing price for delivery in London. The fund normally invests assets in financial instruments with economic characteristics twice the return of the index. It may employ leveraged investment techniques in seeking its investment objective.

The investment (DGL) seeks to track the price and yield performance, before fees and expenses, of the Deutsche Bank Liquid Commodity Index – Optimum Yield Gold Excess Return. The index is a rules-based index composed of futures contracts on gold and is intended to reflect the performance of gold.

The investment (DGP) seeks to replicate, net of expenses, twice the daily performance of the Deutsche Bank Liquid Commodity index – Optimum Yield Gold Excess Return. The index is intended to reflect changes in the market value of certain gold futures contracts and is comprised of a single unfunded gold futures contract.

The objective (IAU) of the trust is for the value of its shares to reflect, at any given time, the price of gold owned by the trust at that time, less the trust’s expenses and liabilities. The trust is not actively managed. It receives gold deposited with it in exchange for the creation of baskets of iShares, sells gold as necessary to cover the trust’s liabilities, and delivers gold in exchange for baskets of iShares surrendered to it for redemption. The trust is not an investment company registered under the Investment Company Act of 1940 or a commodity pool for purposes of the Commodity Exchange Act.

SHORT:

The investment (DZZ) seeks to replicate, net of expenses, twice the inverse of the daily performance of the Deutsche Bank Liquid Commodity index – Optimum Yield Gold Excess Return. The index is intended to reflect changes in the market value of certain gold futures contracts and is comprised of a single unfunded gold futures contract.

The investment (GLL) will seek to replicate, net of expenses, twice the inverse daily performance of gold bullion as measured by the U.S. Dollar p.m. fixing price for delivery in London. The fund normally invests assets in financial instruments with economic characteristics inverse to the index. It may employ leveraged investment techniques in seeking its investment objective.

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ETF BASIC NEWS, NYSE:GLD