Gold Prices Tumble; Dollar Climbs

Benchmark bullion futures are sliding $39.90 at $881.60 an ounce in recent action.
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A strengthening greenback, better-than-expected economic data and selling by technical traders conspired to send gold prices skidding again Tuesday.

Benchmark bullion futures were sliding $39.90 at $881.60 an ounce in recent action on the Comex division of the New York Mercantile Exchange.

The two bullion exchange-traded funds that hold bars of gold,

streetTracks Gold Shares

(GLD) - Get Report

and the

iShares Comex Gold Trust

(IAU) - Get Report

, were off 3.2% and 3.4%, respectively.

"It was only a matter of time before we had a selloff like this," says Carlos Sanchez, a precious metals analyst at New York-based specialty research firm CPM Group.

After languishing around $670 an ounce for most of last summer, gold prices hit an intraday record high of $1,033.90 an ounce March 17. Since then, the price has retreated almost 14%.

Sanchez points to profit-taking as a prime driver in the massive volatility in gold prices over the past few weeks. Also prompting the slide has been a relatively robust dollar. On the technical analysis side of things, chart watchers say the price has blasted through multiple support levels.

Andy Montano, director of precious metals at Toronto-based bullion bank ScotiaMocatta, says critical trend-line support at around $909 was breached late Monday, followed by a break of further support at about $905 early Tuesday.

Tuesday morning's fair economic news then weighed even more heavily and pushed prices down through the 100-day moving average at around $882.

The precious metals stocks were taking a beating, with the Amex Gold Bugs Index, which tracks a basket of gold and silver miners, down 4.5% in recent action.

Goldcorp

(GG)

was off 3.5%, while

Gold Fields

(GFI) - Get Report

was down 2.7%.

Gold Star Resoures

(GSS) - Get Report

and

Yamana Gold

(AUY) - Get Report

were losing 2.3% and 4.5%, respectively.

Newmont Mining

(NEM) - Get Report

was losing 2.6%, and

Barrick Gold

(ABX)

was down 3.4%.

In currencies, one euro was buying $1.5577 vs. $1.5782 Monday. The dollar was buying 101.68 Japanese yen, up from 99.7 yen. The British pound was also losing value against the dollar, with one pound selling for $1.9746 vs. $1.9827.

The currency exchange-traded funds were moving in line with action in the foreign-exchange market.

CurrencyShares Euro Trust

(FXE) - Get Report

was off 1.2%, while the

CurrencyShares Japanese Yen Trust

(FXY) - Get Report

was down about 1.7%.

CurrencyShares British Pound Sterling

(FXB) - Get Report

was down about 0.5%.