Gold for April delivery declined $15, or 1.6%, to $911.70 an ounce on the New York Mercantile Exchange.

Other metals prices were also sharply lower.

 

"We have a sharp decline in Indian demand, while investment demand has been robust in the wake of the string of bad news from the financial world over the past two months," said Jon Nadler, senior analyst at Kitco Bullion Dealers, in a research note.

"In addition, the market now has to factor in the potential net supply increase from the upcoming IMF sales and weigh it against the decline that will result from mine output losses in South Africa," Nadler said.

 

 

Separately, severe power shortages plaguing South Africa recently have forced many major mining companies to lower production, boosting in turn gold and platinum futures. South Africa is the world's second-largest gold producer and the biggest platinum producer.

 

The dollar slipped against most major counterparts Tuesday but gained on the yen as risk appetite returned, and stocks rose on news of Warren Buffett's proposed buyout of bond insurers' liabilities.

 

The dollar index, which tracks the performance of the greenback against a basket of six major currencies, was at 76.236, down from 76.453 in late U.S. trading Monday. See Currencies.

 

Also on Nymex, platinum futures hit another peak overnight before giving up their gains. Platinum for April delivery soared as high as $1,970.90 an ounce Tuesday.

 

The contract was last down $9.50 at $1,929.90 an ounce.

 

March silver dropped 18 cents to $17.29 an ounce, while March palladium declined $9.50 to $433.90 an ounce. March copper was flat at $3.56 a pound.

 

Crude-oil futures fell for the first time in four sessions as estimates that U.S. crude inventories have risen for a fifth week overtook a possible escalation of the conflict between Venezuela and the U.S. See Futures Movers.