Gold for June delivery at the COMEX division of the New York Mercantile Exchange was dropping $23.30 to $1,304.20 an ounce. The gold price traded as high as $1,328.40 and as low as $1,284.40 an ounce, while the spot price was falling $23.80, or 1.8%.
Retail sales for March in the U.S. grew at the fastest clip since 2012, suggesting that consumers were confident of a strengthening economy, a sentiment that hurts gold prices. Escalation of tensions in Ukraine that could see military intervention failed to support the precious metal.
The tumble also continued despite a World Gold Council report that found Chinese gold demand will increase by about 25% during the next four years.
Tuesday marked the one-year anniversary that gold tumbled more than 9%, but unlike that event, analysts don't expect the current 1% pullback to last very long.
"The positive March U.S. retail sales figures released yesterday are obviously having a greater impact on investors," Commerzbank wrote in a research note to investors on Tuesday. "The figures also led to a strengthening of the US dollar, which is depressing the gold price. We expect prices to stabilize shortly."
RBC Capital Markets precious metals strategist George Gero said in a note that Tuesday's selloff included the triggering of a number of sell stops that "shocked and surprised" traders.
Despite the large drop, gold was holding near key support at $1,300 an ounce -- a level it repeatedly has tested the past month.