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Gold futures on Tuesday were down sharply as the U.S. dollar got off to a strong start, pressuring the commodity priced in the currency after modest gains in the previous session.
Commodity traders speculated that the yellow metal could also be facing some resistance after prices punched above $1,700 as a plunge in crude-oil prices CL.1, +89.37% sparked some investors to flee to the perceived safety of bullion.
“The yellow metal trades a touch below the $1700 an ounce, hinting that the upside potential seems, at least temporarily, exhausted near the $1700/1750 area,” wrote Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
Gold for June delivery GC00, -1.98% on Comex was down $27.90, or 1.6%. at $1,683.30 an ounce, following a 0.7% gain on Monday.
May silver SIK20, -5.72%, meanwhile, tumbled 70 cents, or 4.4%. at $14.92 an ounce, after the white metal surged 2% in the previous session.
The downbeat trade in precious metals comes as the U.S. dollar was up 0.4% against a basket of a half-dozen currency rivals, as gauged by the ICE U.S. Dollar Index DXY, +0.34%.
A stronger dollar can make gold less desirable to buyers using other monetary units because the metal is typically traded in dollars.
