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That was to be expected. The Fed tried to flatten the yield curve by selling shortterm debt and buying longterm securities. Their "possible 'significant risks' to the US economy" statement, combined with the negative news from China, the news about the Greek situation, the comments by the ECB chairman about the possible collapse of the Euro and you've got yourself a selling spree.
Now throw in some leveraged hedgies with balance sheet pressures and you've got lots of people selling of their gold positions to raise cash or meet margin calls in other markets.
Long term prediction: gold will continue to go up.
Short term: difficult to say, the need for cash in other sectors and the recent uneasiness may cause gold to drop some more.
On the other hand, there's plenty of people who've been waiting for an opportunity like this to stock up on physical gold (especially the Indians and the Chinese) and this would cause pm prices to go up again.
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