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Gold futures closed lower on Thursday as crude-oil prices plunged while the U.S. dollar rose against a basket of major rivals, lowering the precious metal's investment appeal.

Gold for December delivery erased earlier gains, falling $15.50, or 2.1 percent, to close at $738.50 an ounce on the Comex division of the New York Mercantile Exchange.

"While gold may take some solace from its recent base building, we still expect rallies to be used as selling opportunities for the time being," said James Moore, a precious metal's analyst at TheBullionDesk.com.

In energy trading, crude-oil futures ended at $65.96 a barrel, falling from an intraday high above $70. Lower oil prices reduce the demand for gold as a hedge against inflation.

Meanwhile, the U.S. dollar also changed course, after declining 2.2 percent against the euro yesterday.

The dollar index, which tracks the value of the greenback against a basket of other major currencies, rose 1.2 percent. Dollar-denominated gold prices often move in the opposite direction of the greenback.

"Further cheap-money policies and unprecedented digital money creation will likely be very inflationary in the coming months," said Mark O'Byrne, executive director at Gold and Silver Investments.

In other metals trading, silver futures for December delivery fell 2 cents, or 0.2 percent, to $9.785 an ounce.

December copper slumped 9.5 percent to $1.8905 a pound, while December palladium was almost flat at $196.70 an ounce, with January platinum gained 1.7 percent at $830.60 an ounce.