Metals Sink on High Dollar, Reports

Updated from 12:12 p.m. EDT.

Metals prices took a dive Wednesday, as a new government report pointed to a robust industrial sector and sent the dollar higher.

June-dated gold contracts shed $13 to close at $661.50 an ounce, while July silver contracts lost 39 cents closing at $12.93 an ounce in the New York futures markets.

The bullion exchange-traded funds, which hold stocks of the metals, were losing also. The streetTracks Gold Shares(GLD Quote) was losing 1.4%, and the iShares Silver Trust (SLV Quote) was lower by 2.2%.

The Federal Reserve says industrial production grew a robust 0.7% in April, rebounding from a decline during March. Capacity utilization, which gives a measure of firms' ability to increase output, also rose.

"The industrial sector is showing a huge rebound, and that was an area of the economy we were very concerned about," says Ellen Beeson Zentner, a U.S. macroeconomist at Bank of Tokyo-Mitsubishi UFJ in New York. "When you look at all of the sectors, improvement was very broad."

Zenter also notes that the news should be bullish for U.S. currency. Foreign-exchange investors agreed and warmed to the data by bidding up the greenback.

One dollar was buying 120.69 yen, up from 120.26 yen late Tuesday. One euro was buying $1.352, down from $1.3589 previously. Over time, the price of dollar-denominated assets such as gold and silver tend to fall when the value of the dollar increases.