Gold plunges to 3-1/2-week low as market sell-off hits bullion

April 7 (Reuters) - Gold prices continued to face turmoil on Monday, and hit their lowest levels in more than three weeks, as a wider market sell-off triggered by U.S. President Donald Trump's tariff measures impacted bullion traders.

FUNDAMENTALS

Spot gold XAU= was down 1.9% at $2,981.09 an ounce, as of 0031 GMT, its lowest level since March 13. Bullion hit a record high of $3,167.57 on April 3.

U.S. gold futures GCcv1 fell 1.3% to $2,997.40.

Gold dropped more than 3% on Friday as investors sold off bullion to cover their losses from a wider market meltdown as an intensifying trade war sparked concerns of a global recession. GOL/

The drop in prices made dealers speculate that investors might be selling off gold to realize profits, potentially covering losses or margin calls on other assets. This could trigger a cycle, with more investors selling, further driving down prices in a negative feedback loop.

China on Friday struck back at the U.S tariffs imposed by Trump with a slew of counter-measures including extra levies of 34% on all U.S. goods and export curbs on some rare-earths, deepening the trade war between the world's two biggest economies.

Federal Reserve Chairman Jerome Powell said tariffs increased the risk of higher inflation and slower growth, highlighting the difficult path ahead for policymakers at the U.S. central bank.

In other metals, spot silver XAG= retreated 2.8% to $28.74 an ounce, marking to its lowest level in nearly seven months.

Spot platinum XPT= eased 1.7% to $900.70 and palladium XPD= lost 2.6% to $888.00.

DATA/EVENTS

0600 Germany Industrial Output MM, Industrial Production YY SA February

0600 UK Halifax House Prices MM, YY March