(REUTERS) -- Gold fell more than 1 percent in choppy trade on Wednesday, on track for its biggest one-day decline in two weeks, as a stronger dollar and risk-averse selling across the board also sent equities lower.
Losses in the precious metal accelerated shortly after the U.S. equities markets opened. The S&P 500 fell below key support at its 200-day moving average, erasing gains for the year. Silver tumbled 4 percent.
Traders said a nearly 1 percent jump in the dollar index .DXY broadly pressured commodities as investors flocked to the safety of the U.S. currency and Treasury bonds.
This is a risk-aversion issue for sure. There are some geopolitical concerns out there that have become heightened this week, said Jason Schenker, president of Prestige Economics LLC.
Schenker was referring to simmering tension in the Middle East after Iran's navy chief said closing off the Strait of Hormuz to oil tankers would be easier than drinking a glass of water if Tehran deemed it necessary.
Spot gold was down 1.2 percent at $1,573.25 an ounce by 10:49 a.m. EST. U.S. February gold futures were off $20.40 at $1,575.10.
Spot silver fell 3.6 percent to $27.62 an ounce.
Although gold traditionally has a safe-haven appeal, the euro zone debt crisis is threatening the global economy, causing a liquidity shortage in markets and forcing investors to abandon their gold positions to cover losses elsewhere.
Gold initially traded just slightly lower after news Italy's short-term debt costs halved at an auction as a new package of budget austerity and an injection of cheap long-term money from the European Central Bank won Rome some respite.
The technical outlook for the precious metal remained bleak, with Reuters market analyst Wang Tao suggested spot gold could fall to $1,569.