Gold dives about 2% as selling hits precious metals

New York (Apr 15)  Gold prices dropped about 2 percent on Tuesday as strength in the dollar following forecast-beating U.S. retail sales data pushed it through key chart levels while silver hit a 2-1/2 month low.

Selling accelerated sharply after gold prices broke through their 200-day moving average at $1,300 an ounce, having already picked up steam on a break of the 50-day simple moving average at $1,317, and of $1,307, formerly a resistance level.

Spot gold hit a low of $1,290.34 an ounce and was down 1.7 percent at $1,303 an ounce, on track for its biggest one-day drop since Oct. 1. On Monday it hit a three-week high at $1,330.90, but buyers were quick to cash in gains.

"Gold was weak all morning after yesterday's U.S data. Physical demand is (also) weak, so the selling brought it closer to the 200-day moving average, step by step," Heraeus trader Alexander Zumpfe said. "Finally it broke."