NEW YORK ( TheStreet ) -- Gold prices tanked Friday as the U.S. dollar outshined the metal as the safe haven of choice.

Gold for December delivery plummeted $101.90 to settle at $1,639.80 an ounce at the Comex division of the New York Mercantile Exchange. The gold price has traded as high as $1,757.90 and as low as $1,631.70, while the spot gold price was down $89, according to Kitco's gold index.

Silver prices torpedoed down $6.47 to close at $30.10 an ounce. The U.S. dollar index was down slightly at $78.33. Silver was getting hammered hard as were all industrial metals on global double-dip recession fears, although in after hours trading silver was climbing into the green.

"It's an absolute tantrum by most markets," said Jon Nadler, senior analyst at, in describing the carnage in commodities.

Gold prices tanked almost 10% in two days as investors rushed into cash, pushing the U.S. dollar index to a seven-month high. The dollar rally was pausing Friday, but the strong currency was still weighing on the metal.

The two typically move inversely, and a strong dollar makes the dollar-backed commodity more expensive to buy in other currencies sidelining buyers.

Traders also sold gold to raise cash to cover losses in stocks, and portfolio managers are rebalancing their books headed into the end of the third quarter -- which means booking profits in gold. Both technical factors pressured prices.

"Liquidation selling in gold and silver seems to be outweighing its safe-haven buying," said James Moore, research analyst at, "but we would expect that to return before too long."

Nadler is a bit more skeptical, saying it's possible gold prices make one more push higher on safe-haven buying as global stocks enter a bear market and investors panic over a global slowdown and no resolution to the European debt crisis.

"It's possible that we have one more push to the upside possibly above the previous highs in the low $1,900s but that has to come about quickly," Nadler said.

If gold prices can't hold the $1,700 level, then Nadler foresees a correction to the mid-$1,600 level or even as deep as $1,480-$1,500 an ounce.

"The one problem the gold market has is that is has become overly dependent ... to investment demand by the funds, and the funds have a different mindset," he said. Nadler said that funds will need to raise cash and show profits where they can headed into the end of the third quarter.

Chart watcher David Banister, chief investment strategist at, echoes Nadler's price target. "I had $1,643 weeks ago as a possible low and $1,580 as another one," he said. Banister says he started to buy long positions after gold sank through $1,650. "Gold should be putting in a bottom over two to three days here ... we will add down to $1,620 over the next one to two days of trade."

Despite the lack of current safe-haven demand, physical buying could support gold prices. Nigel Moffatt, head of Treasury at Gold Corp., which operates the Perth Mint, is expecting "robust" demand in China and India next year in the gold market.

"If you look at India and China, they are always going to be buyers," Moffatt said. He said India is a big buyer when the price falls and that China just buys, sometimes buying at record prices.

"Most of our buyers tend to buy when prices are at its highest mainly because the precious metal gets into the media then and prices are going crazy, so they tend to buy a lot," he said.

Moffatt said if the gold price dropped hundreds of dollars and stayed lower, then retail investors could get scared off, but there would still be strong bulk demand from China and India.

Gold mining stocks were destroyed Friday. Kinross Gold ( KGC) tanked 3.81% to $15.15, while Yamana Gold ( AUY) lost 6.82% at $13.74. Other gold stocks, Agnico-Eagle ( AEM) and Eldorado Gold ( EGO)were trading lower at $60.80 and $17.31, respectively.

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-- Written by Alix Steel in New York.

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

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