A rebound in the dollar triggered heavy profit-taking in US gold futures early on Tuesday, while platinum contracts dropped more than 3 percent and the other precious metals also slumped as investors consolidated recent gains.
"The dollar's moderately stronger. Mostly, the market was way overbought. We've been waiting for a correction for a while now and it finally came," said one precious metals dealer in New York.
At 10:34 am EDT (1434 GMT), most-active December gold on the Comex division of the New York Mercantile Exchange slid $19.60 or 2.6 percent to $734.40 an ounce. It fell from a near 28-year high of $754 and hit a session low of $732.5.
The dollar rose from record lows hit during the prior session as investors trimmed overstretched bets against the US currency ahead of key economic data later this week.
The volume of Abu Dhabi's gold sales fell 20 percent in September, and 10 percent in the third quarter versus the same periods a year earlier, due to high gold prices, its Gold and Jewellery Group chief said on Tuesday.
Nymex January platinum slumped $47.10 or 3.4 percent to $1,354.10 an ounce. It had hit a session low of $1,353.40 in early sessions. On Monday, platinum futures hit a contract high of $1,403.90.
Spot platinum was quoted at $1,353/1,337.70. On Monday, spot platinum traded near its all-time high of $1,395 set in November 2006. Gold bullion was quoted at $727.70/728.50, down from the New York Monday close at $746.80/747.60. London bullion dealers fixed the afternoon spot reference price at $731.
Comex December silver dropped 56 cents or 4.1 percent to $13.295 an ounce, trading between $13.24 and $13.86. Spot silver was quoted at $13.15/13.20, lower than Monday's late New York quote of $13.71/13.76. London silver was fixed at $13.28 per ounce. December palladium was down $11.15 or 3.1 percent at $351.25 an ounce. Spot palladium was quoted at $350/353.
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