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Gold Falls on Signs of Improving U.S. Economy, Ukraine Tensions Fail to Add Support

NEW YORK (TheStreet) -- Gold prices were tumbling Tuesday as strong U.S. retail sales data from offset escalation in Ukraine.

Gold for June delivery at the COMEX division of the New York Mercantile Exchange was dropping $23.30 to $1,304.20 an ounce. The gold price traded as high as $1,328.40 and as low as $1,284.40 an ounce, while the spot price was falling $23.80, or 1.8%.

Retail sales for March in the U.S. grew at the fastest clip since 2012, suggesting that consumers were confident of a strengthening economy, a sentiment that hurts gold prices. Escalation of tensions in Ukraine that could see military intervention failed to support the precious metal.

The tumble also continued despite a World Gold Council report that found Chinese gold demand will increase by about 25% during the next four years.

Must Read: Tuesday, April 15: Today in Gold and Silver

Tuesday marked the one-year anniversary that gold tumbled more than 9%, but unlike that event, analysts don't expect the current 1% pullback to last very long.

"The positive March U.S. retail sales figures released yesterday are obviously having a greater impact on investors," Commerzbank wrote in a research note to investors on Tuesday. "The figures also led to a strengthening of the US dollar, which is depressing the gold price. We expect prices to stabilize shortly."

RBC Capital Markets precious metals strategist George Gero said in a note that Tuesday's selloff included the triggering of a number of sell stops that "shocked and surprised" traders.

Despite the large drop, gold was holding near key support at $1,300 an ounce -- a level it repeatedly has tested the past month.

Silver prices for May delivery were declining 46 cents to $19.55 an ounce, while the U.S. dollar index was adding 0.01% to $79.77.

Gold ETF SPDR Gold Trust (GLD) was sliding 1.9%, while iShares Gold Trust (IAU) was slipping 1.8%.

-- Written by Joe Deaux in New York.

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