Gold futures on the COMEX Division of the New York Mercantile Exchange dropped for the third consecutive session on Tuesday as continued rally in U.S. dollar eroded demand for the bullion as an alternative asset. Fresh concerns over a surprise decision by Greek Prime Minister to put the nation's latest bailout plan to a referendum offered some support
The most active gold contract for December delivery dropped 13. 4 dollars, or 0.8 percent, to 1,711.8 dollars per ounce.
Greek Prime Minister George Papandreou announced Monday night his decision to let Greeks vote on a bailout package, a move that surprised markets as it comes just days after eurozone leaders agreed to a comprehensive deal to address the region's debt crisis.
European leaders scrambled about how to react to the surprise development. World Bank president Robert Zoellick warned that the failure of the Greek Referendum would result in a mess.
As a result, global equity and commodities markets plummeted Tuesday, as investor's risk appetite dwindled amid mounting fear over the impact of a potential Greek debt default on the eurozone economy.
The precious metal fell sharply earlier in the session, buckling under the weight of the strength of the dollar as investors scrambled for cash. However, it regained some lost ground during mid-session, as investors' fear that a much more serious debt crisis reaction could be ahead spurred some safe- haven demand for the bullion.
Silver for December delivery lost 1.623 dollars, or 4.7 percent, to 32.731 dollars per ounce.