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New York - Gold futures continued its three-session losing streak on Tuesday by falling below $900 an ounce for the first time since June, as plunging energy prices and a stronger dollar lowered the investment appeal of the precious metal as a hedge against inflation.

Gold futures for December delivery dropped $21.80, or 2.4 percent, to $886.10 an ounce on the Comex division of the New York Mercantile Exchange. The metal touched $883.90 an ounce during day trading, making it the lowest since June 25, the last time the metal settled below $900.

However, gold prices gained momentum in electronic trading on Globex after the U.S. Federal Reserve said it will keep interest rates unchanged at 2 percent and gave no hint that it plans to change policy in the near future.

The Fed made its announcement after regular trading on the New York Mercantile Exchange closed.

Gold last traded at $888.40 on Globex as of 2:30 p.m.in New York.

"The Fed meeting does nothing to alleviate the continuing exodus from commodities even though the central bank held its cards very close to the vest," said Jon Nadler, a senior analyst at Kitco Bullion Dealers.

"September's meeting, however, might be quite a bit different in both tone as well as results."

The dollar reached a seven-week high against the euro on speculation the Federal Reserve would raise its benchmark interest rate to contain inflation.

The dollar index, a measure of the greenback against a trade-weighted currency basket, was at 73.922, compared with 73.485 in late North American trading Monday.

In energy trading, oil reached the lowest peak since May 5 as meteorologists forecast Tropical Storm Edouard will miss most offshore production facilities in the U.S. Gulf Coast while approaching Texas.

Crude oil for September delivery fell as much as $1.41, or 1.2 percent, to $120 a barrel in electronic trading and traded at $120.11 at 2:22 p.m.

Also on the Nymex, silver futures for September delivery dropped 56.8 cents, or 3.3 percent, to $16.572 an ounce. Silver is still up 11 percent this year, while gold has advanced 5.7 percent.

September palladium added 55 cents to end at $353.90 an ounce. But September copper futures fell 2.3 cents at $3.417 a pound and September silver dropped 56.8 cents, or 3.3 percent, to close at $16.572 an ounce.