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Gold Prices Slide; Dollar Rises

Simon Constable

Gold prices plunged Tuesday as the dollar strengthened against its major counterparts.

Benchmark bullion futures were down $18.90 at $866 an ounce in recent action on the Comex division of the New York Mercantile Exchange. Over time, the value of the U.S. currency and the price of gold tend to move in opposite directions.

The largest of the exchange-traded funds that hold bars of solid gold, streetTracks Gold Shares(GLD - Cramer's Take - Stockpickr), was falling 1.7%.

"Given the [general] easing in oil prices gold will remain vulnerable to dollar gains, potentially testing back to the $850-855 area," writes James Moore, a gold market analyst at TheBullionDesk.com in London, in a recent research report.

Some investors buy gold as a hedge against the asset-withering effects of consumer price inflation. So when the cost of crude oil, a key driver in inflation, retreats, then inflationary concerns tend to wane also.

Crude oil reached an all-time closing high around $126 a barrel last Friday before pulling back a bit.

As for the precious metals patch, shares of silver producer Hecla Mining(HL - Cramer's Take - Stockpickr) were slipping 7% after the firm reported disappointing quarterly earnings.

In the foreign-exchange market, one euro was buying $1.5478, down from $1.554 on Monday. The dollar was worth 104.47 Japanese yen, up from 103.85 yen previously. The British pound was selling for $1.9458, down from $1.9564.

The CurrencyShares Euro Trust(FXE - Cramer's Take - Stockpickr) was losing 0.3%. The CurrencyShares Japanese Yen Trust(FXY - Cramer's Take - Stockpickr) and the CurrencyShares British Pound Sterling(FXB - Cramer's Take - Stockpickr) were both down around 0.5%.