Gold on Wednesday dropped to a three-month low as savage selling saw the metal shave off 2.6% to $1,628.10 an ounce. In Japan the Nikkei tumbled to its sharpest fall during the year on Wednesday, while The Dow Jones industrial average lost 125 points, it's third triple digit fall during the year.

Brent crude on the other hand has dropped from $125 a barrel to around $122 a barrel. Silver in India has fallen 3.59% , down by Rs 2067 on Wednesday.

The sharp decline in equities and commodities have re-surfaced after the minutes of the Federal Open Market Committee (FOMC) meeting were released, which did not suggest any push for Quantitative Easing 3 in the US.

QE3 is a mechanism wherein the Federal Reserve buys financial assets to inject more liquidity into the system to push economic growth. Thus more money sparks a rally in commodities like gold, silver, crude and also risky assets like equities.

However, the problem with quantitative easing is that it tends to push inflation higher. For a country like India no quantitative easing by the US is good news as it would help control inflation.

A weak Spanish bond sale also saw concerns over the eurozone debt crisis re-surface, affecting sentiments adversely. Fortunately the Indian markets will react only on Monday as they are closed on Thursday and Friday on account of Mahavir Jayanti and Good Friday.

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