Gold fell more than 2 percent Tuesday, abruptly halting the precious metal's three-day rally on fears about a Greek default and after Federal Reserve Chairman said the central bank might take further steps to support the U.S. economy.
Renewed safe-haven buying of bullion evaporated the day after its biggest daily gain in a month. The metal fell early in a broad financial market decline on worries about a fettering European debt crisis.
Gold kept dropping even as U.S. stock markets turned positive after Fed Chairman Ben Bernanke said the central bank was ready to take further steps to prevent a double-dip recession.
Bernanke said Fed policy makers were "prepared to take further action as appropriate to promote a stronger economic recovery in a context of price stability."
"Yesterday on that good rally the volume wasn't there. It seems the volume only comes into play when the gold is sold off," said COMEX gold options floor trader Jonathan Jossen.
Spot gold was down 2.1 percent at $1,620.89 an ounce by 12:15 p.m. EDT (1615 GMT), off a session high of $1,678.
U.S. gold futures for December delivery were down $34.10 at $1,622.90 an ounce.
Jossen said big players have been buying put options in the last several sessions to protect their downside risk.
Gold had rallied as much as 6 percent in recent sessions, but remained more than 15 percent below its record of $1,920.30 an ounce set in early September.
Silver was down 1.7 percent at $29.81 an ounce. Platinum was down 2 percent at $1,467.74 an ounce, while palladium was down 2.9 percent at $563.47.
© 2023 Thomson/Reuters. All rights reserved.