Gold futures on the COMEX division of the New York Mercantile Exchange fell Tuesday as traders dumped large quantities of gold within a time span of two minutes.
The most active gold contract for August delivery lost 3.3 U.S. dollars, or 0.30 percent, to settle at 1,103.50 dollars per ounce.
Gold futures witnessed nine sessions of losses in a row starting from July 9.
The precious metal was put under pressure Monday as profit taking from bearish traders sent gold near 5-year-lows. Analysts believe that Tuesday's "bear raid" is a result of investors' desire to dump a non-interest bearing asset after a sell-off Monday in reaction to the expectations for an increase in the Fed' s interest rate.
A potential increase in the Fed's interest rate drives investors away from gold and towards assets with a return, as the precious metal bears no interest. Analysts originally expected interest rates to rise in June, but due to weaker-than-expected employment data, expectations were pushed back to September. There has not been an increase in the Fed's interest rate since June 2006, before the beginning of the American financial crisis.
Gold was prevented from falling further as the U.S. Dollar Index fell by 0.78 percent to 97.28 as of 1809 GMT. The index is a measure of the dollar against a basket of major currencies. Gold and the dollar typically move in opposite directions, which means if the dollar goes up, gold futures will fall as gold, measured by the dollar, becomes more expensive for investors holding other hard currencies.
Silver for September delivery added 2.7 cents, or 0.18 percent, to close at 14.785 dollars per ounce. Platinum for October delivery dropped 4.3 dollars, or 0.43 percent, to close at 984.30 dollars per ounce.