Gold dropped on Tuesday, with lower demand for the metal as a hedge against inflation triggered by a drop in energy prices.

Gold futures for December delivery were down $12.50, or 1.5 percent to $814 on the Comex Division of the New York Mercantile exchange. The metal is down from a 27-year high of $848 on November 7.

Crude oil fell to $94.420 per barrel, or 3.3 percent on Tuesday after Saudi Arabia's oil minister, Ali al-Naimi said his country increased oil production to its highest level this year. Crude oil futures reached a record high o f$99.29 on November 21.

Gold also dropped after the dollar rose against the euro. The dollar rose as Citigroup announced it had sold a stake of the bank for $7.5 billion to the state-run Abu Dhabi Investment Authority. Citigroup said the move would help it expand its business and strengthen capital.