NEW YORK (

TheStreet

) --

Gold prices

sunk Monday as global markets faltered and investors sold gold to cover losses in other assets.

Gold for December delivery fell $46.20 to settle at $1,813.3 an ounce at the Comex division of the New York Mercantile Exchange. The

gold price

has traded as high as $1,865.20 and as low as $1,811.10 while the spot gold price was plummeting $42, according to Kitco's gold index.

Silver prices

lost $1.40 to close at $40.21 an ounce while the

U.S. dollar index

was up 0.41% at $77.52.

Scott Redler, chief strategic officer at T3Live.com, believes current declines are more about a percentage selloff in gold, rather than a nominal amount. Prices started off modestly lower Monday but then accelerated, closing down more than 2.2% from Friday's closing price.

Wild headlines have investors buying gold as a safety hedge but also selling to cover losses elsewhere as global markets tank, and the latter was dominating markets Monday on a slew of bad headlines.

Vote: Where will gold prices finish in 2011?

Greece didn't default over the weekend, but it is quickly running out of cash with officials from the International Monetary Fund, European Union and European Central Bank returning to the country Wednesday to determine if Greece will qualify for its next bailout tranche after failing to meet deficit reduction targets.

Germany reportedly is preparing contingency plans in case of a Greece default, French banks are bracing for a downgrade by

Moody's

, although the level would match those from

Fitch

and

Standard & Poor's

, and rumors are swirling that Greece could leave the Eurozone. The Group of Seven, a meeting of finance officials of 7 industrialized nations, inspired no confidence over the weekend - with the group unveiling no grand solution for stopping a global recession.

Jamie Dimon, CEO of

JPMorgan Chase

(JPM) - Get JPMorgan Chase & Co. (JPM) Report

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, launched an attack against Basel III rules that require banks to hold more capital to cover potential losses, calling the rules un-American. With the slew of bad headlines continuing, gold could be a must-own safety asset, but a stronger dollar could derail prices over the short term.

The U.S. dollar index is soaring on safe haven buying, versus a weaker euro and on short covering -- traders buying back positions to reverse a trade. Mark Arbeter, chief technical strategist at Standard & Poor's, wrote in a weekly note that "this breakout by the dollar opens the door for further price gains." As a result, Arbeter sees two scenarios for gold.

On the one hand, if gold prices fall below $1,757 an ounce, that would be a bearish tell. "We think gold has entered a major correction that takes prices down to the $1,450-$1,550 an ounce region." The other option is that gold prices are simply consolidating before popping higher -- a move which could bring prices to $2,000 an ounce, which would then indicate an intermediate- term top for prices.

Trading positions released for September 6th showed a 4.3% increase in speculative gold long positions and a 6.3% short interest increase. If gold prices stay high, however, the latter might be forced to buy back positions and push gold prices higher.

Gold mining stocks

were sinking Monday.

Kinross Gold

(KGC) - Get Kinross Gold Corporation Report

was losing 5.46% to $16.97 while

Yamana Gold

(AUY) - Get Yamana Gold Inc. Report

was down 4.36% at $16.24. Other gold stocks,

Agnico-Eagle

(AEM) - Get Agnico Eagle Mines Limited Report

and

Eldorado Gold

(EGO) - Get Eldorado Gold Corporation Report

were getting hammered at $68.68 and $20.31, respectively.

Related Articles:

How to Invest in Gold

Do Gold Prices Have Room to Rise?

--

Written by Alix Steel in

New York.

>To contact the writer of this article, click here:

Alix Steel

.

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.