Gold plunges to 3-1/2-week low as market sell-off hits bullion

April 7 (Reuters) - Gold prices continued to face turmoil on Monday, and hit their lowest levels in more than three weeks, as a wider market sell-off triggered by U.S. President Donald Trump's tariff measures impacted bullion traders.

FUNDAMENTALS

* Spot gold XAU= was down 1.9% at $2,981.09 an ounce, as of 0031 GMT, its lowest level since March 13. Bullion hit a record high of $3,167.57 on April 3.

* U.S. gold futures GCcv1 fell 1.3% to $2,997.40.

* Gold dropped more than 3% on Friday as investors sold off bullion to cover their losses from a wider market meltdown as an intensifying trade war sparked concerns of a global recession. GOL/

* The drop in prices made dealers speculate that investors might be selling off gold to realize profits, potentially covering losses or margin calls on other assets. This could trigger a cycle, with more investors selling, further driving down prices in a negative feedback loop.

* China on Friday struck back at the U.S tariffs imposed by Trump with a slew of counter-measures including extra levies of 34% on all U.S. goods and export curbs on some rare-earths, deepening the trade war between the world's two biggest economies.

* Federal Reserve Chairman Jerome Powell said tariffs increased the risk of higher inflation and slower growth, highlighting the difficult path ahead for policymakers at the U.S. central bank.

* In other metals, spot silver XAG= retreated 2.8% to $28.74 an ounce, marking to its lowest level in nearly seven months.

* Spot platinum XPT= eased 1.7% to $900.70 and palladium XPD= lost 2.6% to $888.00.

DATA/EVENTS

0600 Germany Industrial Output MM, Industrial Production YY SA February

0600 UK Halifax House Prices MM, YY March