Shares in Australia’s gold miners are being punished for a second consecutive day after the price of the precious metal was smashed overnight.

The price of gold plunged more than nine per cent to a two-year low in overnight trading – its biggest fall in three decades.

Since last Thursday, gold prices have dropped by more than $US200 to $US1,360.60 an ounce on the Comex division of the New York Mercantile Exchange.

The rout continued in early trading in Australia on Tuesday, with the price falling by more than $US100.

Gold stocks in Australia tumbled nearly 10 per cent amid worries that a prolonged lower gold price will wipe out their margins.

Shares in Australia’s largest gold miner, Newcrest Mining, had tumbled seven per cent, or $1.25, to 16.67, following an eight per cent fall on Monday.

Other gold stocks were faring even worse by 1100 AEST.

Evolution Mining, plunged 22.5 cents, or 18.5 per cent, to 99 cents, Alacer Gold was 30 cents, or 10 per cent, weaker at $2.77 and St Barbara shed 10 cents, or 11.1 per cent, to 80 cents.

PanTerra Gold tried to calm investors, saying that the falling gold price would not affect its expected income from its Las Lagunas project in the Dominican Republic.

It had sold at hedged prices of $US1320 an ounce, the company said.

Its shares still lost 0.3 of a cent, or 3.5 per cent, to 8.2 cents.

Fat Prophets resources analyst David Lennox said he could not see gold getting much support in the short term.

Exchange-traded funds were dumping their gold holdings amid a more pessimistic outlook for gold, which was spooking the market, he said.

Rivkin global analyst Tim Radford said investors were favouring US dollars over gold and silver as a currency amid lowered future expectations for global economic growth rates and inflation.

Another factor was Cyprus’s plans to sell gold to resolve their debt situation.