Gold price slumped to a five-year low on Monday, falling over 4% due to frantic selling of the yellow metal by China and aided by news of a likely interest rate hike by the US.

The fall also triggered a 5% fall in platinum prices to $942.49 an ounce, the lowest in over six years.

Gold price fell to $1,088.05 an ounce, the lowest since March 2010, as soon as trading began on the Shanghai Gold Exchange, marked by record volumes.

"The market looks very technically weak and the biggest buyer of all, China, is now selling gold as opposed to buying it on price dips. That's a recipe for weaker prices," said Victor Thianpiriya, an analyst at ANZ Bank in Singapore.

The loss was partially reversed later, with spot gold bouncing back to trade above the crucial support level of $1,100 an ounce; in the afternoon, it was trading 1.5% down at $1,116.43 an ounce.

Gold prices have been on a downhill since last week in the wake of the dollar registering gains after the Federal Reserve Chair Janet Yellen told the US Congress that if the US economy grows on expected lines, it will raise interest rates.

China's gold reserves at 1,658 tonnes of gold at the end of June, this year, represented an increase of about 57% over last year. 

Its reserve figures adjusted six years ago indicate that gold now accounts for about 1.65% of the country's total foreign exchanges reserves, down from 1.8% in June 2009.

"This implies stockpiling of around 100 tonnes per year, which is dramatically lower than market expectations," said the analysts at Citigroup.

A Hong Kong trader attributed the recovery to tactical buying. "I just feel there's a big push to get gold below $1,100 and then we bounced very quickly," said the trader.

Platinum also recovered lost ground to trade at $606 per ounce. Silver also was affected, reports Reuters.