Gold Drops with Oil, Silver and Platinum Down Sharply

New York precious metals dropped sharply Tuesday while oil was driven lower and the US dollar gained strength following comments from Treasury Secretary Paulson and Philadelphia Fed President Charles Plosser.

Both reaffirmed support for a strong dollar, signaling potential interest rates hikes.

Silver dropped sharply, losing 43 cents to close at $18 an ounce.

Platinum plunged by $42.80 to stop at $1,808.20.

Gold lost $15.20 to end at $948.50 an ounce, and was as low as $944.50 per ounce.

"Gold’s early morning progress was rudely interrupted by hawkish dollar comments coming from Messrs. Paulson and Plosser," said Jon Nadler, senior analyst at Kitco Bullion Dealers.

"The P&P duo’s unusually forceful dollar-defensive statements had the greenback surge 0.61 up to 72.50 on the index and up to 1.578 against the euro," Nadler said.

"Once oil gave way, the early gains we saw in bullion turned to snowballing losses…"

Gold typically follows oil and moves opposite to the dollar, as a weakened dollar encourages investors to buy gold, considered a hedge during times of high inflation and economic uncertainty.

A falling greenback also makes commodities, like silver, gold and platinum, cheaper for overseas investors.

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