Gold prices recovered from huge overnight losses Monday before paring declines to about 1 percent. Still, since Thursday the precious metal tumbled more than 9 percent in its biggest three-day drop since 1983.

Shortly after midnight gold for immediate delivery had plunged to an 11-week low of $1,534.49 an ounce before recovering to $1,558.39, bringing losses since early this month to just under 15 percent, gold's biggest decline since October 2008.

Silver for immediate delivery fell in overnight trading 16 percent to $26.04, its weakest since November last year, before clawing its way back to $27.97, a fall of more than 9 percent. Silver has lost more than a quarter of its value in just three sessions.

Despite the carnage, gold remains up more than 25 percent on the year -- its 11th consecutive annual gain -- and silver is still up 7.4 percent, making them both prime targets for investors who need to cover non-precious metals losses.

Gold is one of the few assets that remain in positive territory this year, in a sense it is one of the last assets standing, and because of this as investors head for cash they sell the assets that have performed, Edel Tully, a London- based analyst at UBS AG, wrote in a report.

Essentially gold is a victim of its own success as liquidity trumps, Tully wrote.

That success is expected to be reflected in its prices, according to traders and analysts.

We view the latest correction in gold as temporary, Deutsche Bank said in a note. Gold and silver prices will keep on rising in an environment where concerns towards the global banking system remain, in our view. If and when these concerns are addressed, negative real interests are still a bullish backdrop for the sector.

In early floor trading Monday on the New York Mercantile Exchange gold was off 1.2 percent to $1,620.20, while gold for immediate delivery was down $27.37 to $1,622.03.

Silver on the New York Mercantile Exchange fell 5.25 percent to $28.52, while silver for immediate delivery was off $2.02 at $28.30.