Gold continues to drop as dollar gains

Gold futures on the COMEX Division of the New York Mercantile Exchange slipped for the sixth consecutive session on Thursday, as the dollar's rally muted demand for precious metals as an alternative investment. The most active gold contract for February delivery lost 23.2 dollars, or 1.5 percent, to 1,540.9 dollars per ounce. Italy raised a total of 7 billion euros in four separate auctions after a successful short-term debt sale on Wednesday. The Treasury had planned to sell between 5 billion and 8.5 billion euros of bonds. The euro sank to its lowest level against the dollar since September 2010 on Thursday after Italy's final bond auctions of 2011 disappointed some market participants. Market analysts have attributed gold's recent weakness to a renewed rush for dollar liquidity, as a stronger dollar makes gold less attractive to holders of other currencies. "Despite higher crude oil and silver prices, gold continued to drop as investors continue to liquidate their gold positions in favor of the stronger U.S dollar," a trader said. Gold price, which lost 12 percent so far in December, is still up by more than 8 percent in 2011 through Thursday's settlement. As a result, the year-end profit-taking from fund managers drives gold below key technical levels, prompting a mad rush for the exits by speculators. Silver for March delivery recovered 8.1 cents, or 0.3 percent, to 27.315 dollars per ounce. Platinum for April delivery trimmed 25.6 dollars, or 1.8 percent, to 1,366.8 dollars per ounce.