Gold, silver futures slump after dollar gains; oil hits $123

Other commodities traded mostly higher, with crude oil hitting another record above $123 a barrel and agriculture futures rising broadly.

The dollar ticked higher against the 15-nation euro amid negative economic data out of Europe. A government report in Britain said that industrial production slipped between February and March, while troubling signs also emerged in Germany, Europe's largest economy. The euro bought $1.5388, down from the $1.5533 it bought in late Tuesday.

A stronger dollar encourages investors to sell hard assets like gold and silver, which are considered safe, alternative investments during times of economic uncertainty and rising inflation.

"The dollar comeback has definitely dented the gold market," said James Steel, analyst with HSBC in New York.

Gold for June delivery fell $7.10 to $870.60 an ounce on the New York Mercantile Exchange, after earlier dropping as low as $864.40.

Gold has given up most of the gains made this year and is 15 percent off its all-time high of $1,038.60 an ounce amid the stabilizing dollar and signs that credit turmoil may be nearing an end.

Other precious metals also traded lower. July silver lost 16 cents to $16.70 an ounce on the Nymex, while July copper fell 4.3 cents to $3.8355 a pound.

In energy futures, crude oil shot above $123 for the first time Wednesday amid worries about rising demand and falling distillate stockpiles. The department's Energy Information Administration said in a weekly report that gasoline demand rose slightly last week while supplies of distillate fuels fell unexpectedly.

Light, sweet crude for June delivery retreated in early trading and then jumped to a new trading record of $123.56 a barrel on the Nymex. On Tuesday, the contract closed at $121.84.