Gold futures dropped sharply to end below $900 an ounce Tuesday, the lowest in more than a week, as a surge in the U.S. dollar lowered investment demand for the precious metal. Silver also declined.
Gold rose 31 percent in 2007 as the Federal Reserve cut U.S. interest rates to ward off a recession, leaving the dollar 9.5 percent lower against the euro. Gold for April delivery declined $19.10 to finish at $890.30 an ounce on the New York Mercantile Exchange. The price earlier touched $888.40, the lowest for a most-active contract since Jan. 23.
Gold usually moves in the opposite direction of the dollar, which gained the most against the euro in nearly eight weeks after a report said growth in the euro-region is slowing.
The U.S. dollar rallied against most major currencies, as currency traders appeared to discard off disappointing U.S. nonmanufacturing sector data and focus instead on growing signs of an impending slowdown in Europe.
The dollar index, which tracks the performance of the greenback against a basket of other major currencies, gained 0.9 percent at 76.080.
Meanwhile, silver futures for March delivery dropped 43.5 cents, or 2.6 percent, to $16.345 an ounce. Before today, the metal climbed 12 percent this year.
April platinum dropped $12.10 to $1,785.50 an ounce. March palladium fell $7.90 to $423.10 an ounce. March copper dropped 8.65 cents to $3.2120 a pound.