Gold Falls Below $800

Yamana Gold and Goldcorp rally.
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Gold prices pulled back again Tuesday as bullion dealers continued to dump positions.

Benchmark contracts dropped $8.70 to close at $799 an ounce on the Comex division of the New York Mercantile Exchange. The price of the metal has now fallen about 5% from an intraday high of $841.30 reached last Thursday.

That same day the spot price settled at $835.20 an ounce, marking the highest close ever and shattering the previous record settlement price of $825.50 set in January 1980.

The highest ever intraday price for a spot contract of $875 an ounce, also reached in January 1980, remains unsurpassed.

"It's a normal correction in a healthy bull market," says Charlie Supapodok, a hedge fund manager at Marlie Capital in New York City.

The gold price has been vulnerable to the rally in the U.S. currency seen over the last few days as the greenback bounced back from record lows against the euro, explains Supapodok. Prices for dollar-denominated assets tend to move inversely with the value of the dollar.

He says a decline to $760 is very possible, but he expects prices to find chart support around that level before resuming an upward trend.

Gold has been on something of a tear the last few weeks, rallying from around $670 an ounce in late August.

The bullion exchange-traded funds that hold inventories of gold,

streetTracks Gold Shares

(GLD) - Get Report

and

iShares Comex Gold Trust

(IAU) - Get Report

, each rallied about 1%.

Among the miners,

Yamana Gold

(AUY) - Get Report

ended the day up 5%, while

Goldcorp

(GG)

rose 3.3% and

Randgold Resources

(GOLD) - Get Report

was better by 4.1%.