NEW YORK (AP) – Gold prices briefly plunged to a 21-month low Friday as world stock markets plunged, puzzling some analysts who believe the traditional safe-haven asset should be soaring amid the economic turmoil.

Gold clawed back into positive territory later in the day, but prices are still down about 20 percent since the start of the month as fears of a global recession drag down the value of commodities from crude oil to corn. The declines have raised questions among investors about whether gold has given up its long-held claim as a safe alternative investment.

“Gold has not been benefiting from the flight to quality like we would have thought,” said Matt Zeman, head trader at LaSalle Futures in Chicago. “People aren’t stepping up and buying it.”

Zeman said investors appear more comfortable keeping their money in cash or government bonds.

Gold for December delivery fell as much as $33.70 to $681 an ounce on the New York Mercantile Exchange, the lowest level for that contract since Jan. 11, 2007. Prices later rose $15.60 to settle at $730.30 an ounce.

Other precious metals ended lower. December silver lost 20.5 cents to settle at $9.295 an ounce on the Nymex, while December copper declined 11.8 cents to settle at $1.6865 a pound.

Gold’s recovery came as U.S. stocks pared some of their early heavy losses.

Still, the metal has plummeted about 30 percent since surging to an all-time trading high of $1,033.39 on March 17, confounding some investors who have been predicting the metal could rise as much as $2,000.

Gold has traditionally been seen as safe place to invest during rough times because its known for holding its value. But as recession worries send stock markets across the globe into retreat, hedge funds and other large institutional investors have been cashing in commodities to cover bad bets on stocks and other assets.

“A lot of these funds still have profitable positions in gold, so they’re going to sell whatever they can to raise cash,” said Jon Nadler, analyst with Kitco Bullion Dealers Montreal.

He noted that the likelihood of a recession means consumers will be buying less gold jewelry, potentially adding to the downward momentum on prices.

Despite gold’s recent declines, not all investors are giving up on it.

Jeffrey Nichols, managing director of American Precious Metals Advisors, said he still believes gold has “extremely bullish longer-term prospects.” He noted that gold is off about 12 percent since the start of the year – far less than most other asset classes.

Gold’s drop doesn’t “mean that gold is suddenly no longer a safe haven in turbulent times,” Nichols said in a note. “But it does demonstrate that at times of panic even the yellow metal can fall victim to developments in other asset markets.”

Meanwhile, the global sell-off in equities weighed on other commodities Friday.

In energy markets, oil prices tumbled despite OPEC’s decision to slash output by 1.5 million barrels in a bid to shore up sagging prices.

Light, sweet crude for December delivery fell $3.69 to settle at $64.15 a barrel on the Nymex.

In other Nymex trading, heating oil fell 8.56 cents to settle at $1.9701 a gallon, while gasoline futures fell 9.99 cents to settle at $1.4779 a gallon.

Meanwhile, agriculture futures fell on the Chicago Board of Trade.

Corn for December delivery lost 17.5 cents to settle at $3.7275 a bushel, while soybeans for January delivery fell 21.5 cents to $8.67 a bushel.

December wheat fell 6.75 cents to settle at $5.1625 a bushel.

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