Gold futures on the COMEX Division of the New York Mercantile Exchange continued to drop on Tuesday, touching a fresh 7-week low, under pressure from a stronger U.S. dollar as negative headlines out of Europe and weak U.S. retail sales data weighed on market sentiment.
The most active gold contract for February delivery dropped 5.1 dollars, or 0.3 percent, to 1,663.1 dollars per ounce.
A trader said gold received some initial support from the news that Spanish Treasury sold more short-term paper than it had planned at an auction.
However, decent demand for Spanish bonds was not enough to provide the U.S. and European equities market with relief, the precious metal gradually lost its earlier gains as dollar firmed and equities dropped, after a report showed Germany's Chancellor Angela Merkel rejected raising Europe's bailout fund cap.
Market participants pointed out that gold was dragged down by a stronger U.S. dollar, as there remains huge faith in the U.S. dollar as a safe haven and investors continued to dump risky assets for cash in times of financial market crises.
One trader said the continued tensions in Syria and Iran are worth watching as any warring action could send the precious metals rallying.
Meanwhile the weaker-than-expected U.S. retail sales in November also helped gold's slide, by tempering some of the expectations for a strong holiday season, which may help prop the economy and perhaps translate into more jewelry demand.
Silver for March delivery added 25.8 cents, or 0.8 percent, to 31.26 dollars per ounce. Platinum for January delivery rose 5.4 dollars, or 0.4 percent, to 1,492.3 dollars per ounce.