NEW YORK ( TheStreet) -- Gold prices tumbled Tuesday, losing 3.1% of their value, dragged down by technical selling and profit taking. Gold for February delivery shed $44.10 to $1,378.70 an ounce at the Comex division of the New York Mercantile Exchange. The gold price traded as high as $1,417.80 and as low as $1,375 during Tuesday's session. The U.S. dollar index was up 0.18% to $79.37 while the euro was down 0.34% at $1.33 vs. the dollar. The spot gold price Tuesday was down $37.20, according to Kitco's gold index. Gold prices were hammered as early morning profit taking triggered afternoon sell stops, forcing traders to exit positions to lock in gains. Bargain hunters were then reluctant to try to catch gold's falling knife, choosing instead to wait for prices to bottom out before buying more. Gold prices breached but then bounced slightly higher from the 50-day moving average of $1,377 an ounce. Typically gold has moved higher from that area of support. If that level is breached, prices will have to look to the 200-day moving average of $1,265 an ounce. "Short term, the threat of profit-taking corrections remains," says James Moore, research analyst at fastmarkets.com. Improving risk appetite has also led investors to re-balance their portfolio and diversify into other assets, like stocks. The slew of good news for equities keeps piling up: Jobless claims hit their lowest point in almost two and a half years; the Federal Reserve's $600 bond-buying program; an extension of tax cuts and business incentives; a low volatility reading for the markets; and stronger-than-expected manufacturing data out of the U.S. and U.K.; killer December auto sales. Worries over sovereign debt in Europe and tensions between North and South Korea have eased, limiting gold's appeal as a safe-haven asset. Investors seem much more interested in the Dow Jones Industrial Average's strong showing Monday that pushed the index to a 28-month high. On Tuesday investors were wobbling on their stock interest, but kept selling gold nonetheless. Tuesday's price dip could unearth "bargain-hunting" buying from money managers who sold gold at the end of 2010 and are now looking to buy back positions. Physical buyers, especially those in price-sensitive emerging market countries like China and India, are also keen to buy gold at "cheaper" levels. "There's going to be a lot of investor inflows and also asset allocation," argues Phil Streible, senior market strategist at Lind-Waldock. "I think that any significant weakness throughout the course of this week should be met with quite a bit of buying." This so-called January effect for gold doesn't always pan out. In 2010, gold prices slid from $874.50 to a low of $810 mid-month before climbing 3.7% higher in February.