Gold fell the most in two weeks on Tuesday as the U.S. dollar rebounded against the euro, hindering the investment demand for the precious metal
Gold futures for June delivery lost $15.30, or 1.7 percent, to $869.60 an ounce on the Comex division of the New York Mercantile Exchange, the biggest percentage drop since April 29. The precious metal soared to a record $1,033.90 on March 17.
The dollar gained as much as 0.8 percent on signs that the U.S. economy is weathering the housing slump. The dollar index, which tracks the greenback against a basket of other major currencies, rose to 73.20, up 0.4 percent, after the Commerce Department reported better-than-expected April retail sales.
The euro, which reached a record $1.6019 on April 22, fell as low as $1.5431.
Gold has advanced 29 percent in the past 12 months as sliding borrowing costs spurred a slump in the dollar and boosted demand for the precious metal as a hedge against inflation.
Federal Reserve Chairman Ben Bernanke said Tuesday that despite some improvements, financial markets remain severely stressed.
These are welcome signs, of course, but at this stage conditions in financial markets are still far from normal, Bernanke said in a speech prepared for a conference on financial markets
Also on the Nymex, Silver futures for July delivery tumbled 39.7 cents, or 2.3 percent, to $16.828 an ounce. The price is up 13 percent this year.
July platinum dropped $49.90, or 2.4 percent, to $2,073.40 an ounce and June palladium fell by $5.95 to close at $440.85 an ounce. July copper lost 2 cents to end at $3.73 a pound.