NEW YORK ( TheStreet ) -- Gold investors ran for the exit Tuesday as a crumbling euro and stronger U.S. dollar made gold more expensive to own.

Gold for December delivery sunk $23.80 to close at $1,652.80 an ounce at the Comex division of the New York Mercantile Exchange. The gold price has traded as high as $1,678.20 and as low as $1,628.20 an ounce while the spot gold price was shedding $13, according to Kitco's gold index.

Silver prices managed to eek out a gain of 1 cent to close at $31.83 an ounce while the U.S. dollar index was flat at $77.16.

We are "as good as gone," says futures trader, Anthony Neglia, president of Tower Trading. "As the euro collapses, gold holdings are becoming more expensive."



Neglia thinks that gold had been the safe haven and currency of choice, but now as uncertainty in Europe persists and drags the euro lower, the dollar gains strength and gold falters. "Anybody that was long gold in euros or other currencies are starting to bail." Indeed the gold price was down in every single currency with the most notable decline in the Brazilian real.

Germany also hinted at no quick solution to the European crisis Monday, dashing hopes that EU officials could come up with a plan for Greece, banks and bondholders by Sunday. "Euro Zone hopes for quick resolution were dashed by Germany," says George Gero, senior vice president for RBC Capital Markets, "which means no large stimulus coming for now." There was some speculation that any dramatic plan would have to include the European Central Bank pumping more money into the system.

There are some key levels that traders and chart watchers are focusing on. On the high side, Neglia cites $1,729 an ounce, which is a 50% rally from the $1,535 low, to the $1,923 high. Neglia is watching $1,480 on the downside, which if gold breaks through he says, all bets are off.

One common pattern for gold is that investors buy and hold the metal, as a hedge or safety play, but gold's 10% shakeout in September scared a lot of investors, leaving them reluctant to buy back positions. Others might be more apt to trade the metal rather than just hold it. "You can't just park your cash ," says Neglia, "you have to trade it."

Neglia believes that there will come a time when buyers will step into the market and buy but at what level is the question. Many experts are expecting strong physical buying from China and India in the coming weeks, which might provide a floor for prices, but providing more upside might be hard.

Also weighing on gold Tuesday is a pending vote from the Commodity Futures Trading Commission on position limits. On the table is a rule which would limit a spot month position to 25% of deliverable supply to curtail speculation.

"We still don't know what is deliverable supply according to them," says Gero, "gold is in Delaware Depository, gold is in Royal Canadian Mint, gold is in Zurich in allocated or unallocated accounts, gold is in HSBC in London." Gero doesn't think the threat of position limits is a huge headwind for gold but more like an excuse to sell after prices failed at $1,700 an ounce.

Stocks and other commodities were being dragged down Tuesday by slowing growth from China, which is a mixed bag for gold. China grew 9.1% in the third quarter, which was below estimates. The number combined with slowing export results have made investors nervous that the country, a voracious consumer of all commodities, will stop buying.

Goldman Sachs wrote in a note that downside risks to growth remain, with external demand expected to weaken in the fourth quarter but that China might shift its monetary policy as a result. China has been aggressively raising interest rates and raising reserve requirements to try to drain money from the system with inflation at 6.1%. Goldman estimates that inflation could fall to 5% in the next quarter and that the lower level plus growth pressure could trigger a relaxation, by either stopping rate hikes or freeing up more cash.

Interest rates are at 3.5% and even if inflation falls to 5%, interest rates would still be a negative 1.5%, which typically has been good for gold. When an investor's money is losing value in the bank, gold becomes an attractive alternative asset to own. On the flip side, if slowing growth means less inflation in China, then gold will also become less attractive as a hedge against rising prices.

Gold mining stocks were struggling Tuesday. Barrick Gold ( ABX) was losing 0.95% to $46.75 while Newmont Mining ( NEM) dropped 2.86% to $64.31. Other gold stocks, Goldcorp ( GG) and AngloGoldAshanti ( AU) were trading lower at $46.33 and $41.67, respectively.

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-- Written by Alix Steel in New York.

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