Gold Price War Under Way

Gold prices hit a six-and-a-half-week low to settle at $1,096 an ounce. A stronger U.S. dollar put pressure on the precious metal dragging prices down, but it's free fall was supported by bargain hunters.
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NEW YORK (TheStreet) -- Gold prices nose dive under $1,100 as gold's tug of war heats up.

Gold prices hit a 6 1/2 week low Monday

to settle at $1,096 an ounce. A stronger U.S. dollar pressured metal prices down, but it's free fall was slowed by bargain hunters. The

SPDR Gold Shares

(GLD) - Get Report

added another 6 tons on Monday for a total of 12 in two trading days signaling that many traders were using pullbacks to buy gold. Volume is expected to be light for the rest of the shortened holiday trading week, but daily GLD share volume was over 20 million on Monday.

Gold found some support early Tuesday as investors jumped into more risky assets like equities and commodities on economic recovery hopes and improving home sales data. The final revision of

third-quarter gross domestic product

showed the nation's economy grew at a 2.2% annual rate which was less than anticipated while existing home sales soared 7.4% in November. The dollar slid and gold reversed some of its losses.

But any uptick in gold was short lived; gold prices are expected to keep plummeting until the end of the year. "I am looking at a $1,050 to $1,125

range for the next couple of weeks", says George Gero, vice president of global futures at RBC Capital Markets. "Longer term these large sell-offs represent buying opportunities but not in the short term." Currently the

U.S. dollar index

was rising.17% to $78.25 while gold prices were tumbling $16.10 to $1,079.90 an ounce at the Comex division of the New York Mercantile Exchange. Gold delivery for February, the most actively traded contract, has traded as low as $1,078 and as high as $1,098.20.

Silver prices

were falling 16 cents to $16.87 while copper was giving up 4 cents to $3.11.

Mining stocks, a more leveraged way to

invest in gold

, were finding minimal support with broader equities.

Barrick Gold

(ABX)

and

Newmont Mining

(NEM) - Get Report

were down 1% to $38.66 and $46.70 respectively. Shares of

Freeport McMoRan Copper & Gold

(FCX) - Get Report

were slightly higher at $78.03.

IAMGOLD

(IAG) - Get Report

was up 1% to $15.16 after receiving an upgrade from

UBS

to buy from neutral.The GLD was slipping slightly to $105.62 while the mining ETFs,

Market Vectors Gold Miners

(GDX) - Get Report

and

Market Vectors Juniors

(GDXJ) - Get Report

were trading at $44.92 and $24.41 respectively.

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Written by Alix Steel in New York

.