Gold, Silver Extend Losses On Euro Worry

Comex February gold falls $28.10 to $1,567.40 a troy ounce

Silver slides to four-month low, down 4.7%

Gold's failure to retake key moving average could spell more weakness, analysts say

Holiday-thinned trading continues between Christmas, New Year's

Precious metals extended their earlier losses on Wednesday, with silver hitting a four-month low as investors turned to the safety of cash on fresh euro-zone worries.

The euro plunged to 11-month lows against the U.S. dollar on jitters ahead of an Italian debt auction. Market participants worried that investor reaction to the 10-year debt offering could place the spotlight back on the shaky financial stability of the euro zone's third largest economy.

The most actively traded silver contract, for March delivery, was recently down $1.345, or 4.7%, at $27.395 a troy ounce on the Comex division of the New York Mercantile Exchange. Futures fell as low as $27.340, the lowest intraday price since Sept. 26.

Gold for February delivery was recently down $28.10, or 1.8%, to $1,567.40 a troy ounce. Gold has settled lower for four consecutive sessions.

"Gold prices drifted even lower overnight and this morning as year-end sellers once again cashed still-profitable chips in and opted to park proceeds in cash at least until the first week of 2012 draws to a close," Kitco Metals analyst Jon Nadler said in a note.

Gold was still up more than 11% from the start of the year through Tuesday's settlement, giving money managers looking to juice year-end results a reason to cash out.

Precious metals were battered in mid-December, as investors worried about a potential cash crunch in the euro zone turned to cash for safety, and haven't recovered since.

The benchmark gold futures contract on Dec. 14 crashed below the 200-day moving average for the first time in more than two years, a bearish signal for market participants who place bets based on patterns in market activity.

"Gold's failure to reclaim (the average) does leave the metal vulnerable to further pressure over the short to medium term and could suggest a weak start to 2012 as cash concerns intensify," said James Moore, an analyst with metals research service FastMarkets.

Comex trading was closed Monday in observance of the Christmas holiday, and activity has remained lower than normal on Wednesday as many trading desks were thinly staffed ahead of the New Year's holiday.