Gold is currently at $1,106.30 (-2.26%) an ounce. The metal dropped to a five-year low after positive economic data from the U.S. intensified expectations of an imminent rate hike by the Federal Reserve.

Some analysts believe that this sharp decline is a sign that some funds are pessimistic about the metal's outlook. "This kind of sharp drop during early Asian hours is a strong indication that a big fund is selling their holdings of gold," noted Gnanasekar Thiagarajan, director of Commtrendz Risk Management.

Some other analysts also say that this sharp drop couldn't be driven by fundamentals, because the dollar was stable the moment gold plunged.