Gold slides on oil, strong dollar
The price of gold fell Tuesday amid a broad retreat in commodities led by oil, as the damage caused by Hurricane Gustav appeared less severe than expected.
Gold for October delivery was down $24.60, or nearly 3%, to settle at $806.60 an ounce on the New York Mercantile Exchange. The precious metal hit a session low of $797.40, down 23% from its mid-July peak of $983.90.
"The massive commodities sell-off that resumed on the heels of a weakening Gustav on Labor Day accelerated overnight," Jon Nadler, Senior Analyst at Kitco Bullion Dealers, wrote in a note to clients.
The price of oil, meanwhile, tumbled nearly $10 a barrel Tuesday morning. By midday, crude had recovered some ground but remained near a 5-month low.
Lower oil prices put less of a strain on the U.S payday loan. economy, which has been burdened by high energy prices.
Signs of a stronger economy helped the U.S. dollar gain ground against other major currencies. Economic weakness in Europe and Japan also helped buoy the greenback.
A stronger dollar undercuts the appeal of gold for investors looking to hedge against inflation. And a more robust greenback makes commodities priced in dollars more expensive for overseas buyers.
On Wall Street, stocks rose in early trade as investors cheered oil’s retreat, the stronger dollar and a bright spot in the financial services sector. But the broader market went south as technology and commodity-related shares tumbled.