Commodity market analysts in Tokyo said the nature of gold as a safe haven asset has not changed despite its sharp fall in prices this week from $600/oz on Monday to $546/oz Wednesday.

Tatsuo Kageyama, analyst at Kanetsu Asset Management said spot gold saw a massive selloff after the bullion prices slid below the resistance levels of $600/oz on Monday and $550/oz on Tuesday during the US trading hours.

He added market participants were selling the bullion to avoid the risk of the metal hitting lower prices.

"The sentiment is bad, and I see the next resistance level at $530/oz," Kageyama said.

He attributed the global weakness in stock prices has urged the shift of investment money from "risky asset" to "safer asset" such as US dollars and government bonds.

The US dollar traded higher against the yen at Yen 115.00-115.20 during Tokyo trading hours, from Yen 114s earlier in the week.

Kageyama, however, added that gold remains as a hedge against geopolitical and economic uncertainties.

"The long term market conditions have not changed," he said, adding that when gold prices recover, it will regain its profile as a safe haven asset.

As of 0630 GMT Wednesday, spot gold was traded at $555.80-556.30/oz, higher from the intraday low of $546/oz earlier.

Kaname Gokan, commodity strategist at Okato Shoji, said gold may be hitting the bottom.

"The recent price fall, is not tragic. There has been no major catastrophe. There is only profit-taking," Gokan said.

Gokan noted gold started trading at $520/oz this year. The prices have only returned to the January price levels after rising above $600/oz, he said.