Gold futures dropped 2 percent on Thursday to trade under $800 an ounce after the dollar gained against most other major currencies, lowering investors' interest in the precious metal.
Gold for February delivery dropped $14.80 to finish at $804 an ounce on the New York Mercantile Exchange.
The dollar rose against the euro, yen and pound, after reports showed retail sales and wholesale inflation were at a 34-year high in November.
The dollar index, which tracks the performance of the greenback against a basket of other major currencies, rose 0.6 percent at 76.595.
The primary factor behind the decline was the relative firmness in the U.S. dollar and a stall in the price of crude, whose traders are well aware that an economic slowdown would quite likely negatively impact the demand for black gold, said Jon Nadler, senior analyst at Kitco Bullion Dealers, in a research note.
In recent months, the dollar and gold have had a strong tendency to trade in opposite directions. Investors offset this by often purchasing gold as a hedge against inflation and currency weakness and sell the precious metal once the dollar improves.
The dollar rebound sent other precious metals lower, too, with silver for March delivery falling 64.5 cents to $14.18 an ounce.