PRECIOUS METALS: Gold futures drop as oil prices tumble

Gold for December delivery fell by 50 cents to close at $816.30 an ounce on the Comex division on the New York Mercantile Exchange. Last week, the metal plunged the most in 25 years, erasing all of this year's gains, as the dollar jumped to a six-month high.

The hit an intra-day low of $806.80 during the session, but continued its decline in electronic trading on Globex, where it traded at $815.80 as of 1:45 p.m. EDT.

On Tuesday, gold climbed $11.10, or 1.4%, to close at $816.80 an ounce on the Nymex.

"Gold, rebounding from oversold levels, rose for the second time" on Tuesday and the market made a new low during the trading session, but closed higher than the previous day's high, said Mark O'Byrne, a director at Gold and Silver Investments Ltd.

"This is a short-term bullish indicator and often happens near market bottoms and could mean a trend reversal is developing," he said in a note to clients.

"The fundamentals remain very strong with geopolitical risk, deepening worries about the financial sector, poor economic data and soaring inflation and stagflation internationally leading to very significant physical demand internationally."

For now, worries about growth outside the U.S. allowed the dollar to rebound Wednesday, sending the euro back toward six-month lows against the greenback and lifting the U.S. unit against most major counterparts.

The dollar index, which measures the greenback against a trade-weighted basket of currencies, rose to 77.10 from 76.746 in late North American trading Tuesday.

Oil futures fell by 1 percent on Globex after the Energy Department reported a bigger-than-expected rise in crude inventories. The data also showed a fourth-weekly decline in gasoline inventories.

In other metals, September silver dropped 6.5 cents to close at $13.04 an ounce and September palladium fell $5.30 to end at $278.55 an ounce.

September copper futures lost 3.1 cents to close at $3.397 a pound. October platinum gained $17.60 to finish at $1,368.90 an ounce.