Gold, on the other hand, has been hammered. After returning to the US$1,150 level late this morning, the metal drifted back down to the $1,145 level. Then, starting at aboout 12:30 PM ET, it dropped below that level, reaching about $1,136. After a half-hour respite, the decline continued until about 1:45 PM; the bottom was reached at almost exactly $1,125. After a slight rebound to $1,130, gold's been in a much lower trading range - clse to bottom-scraping. As of the time of this updated post, spot gold's at $1127.80
Oddly, the downblast occurred largely independent of the U.S. dollar's movement.
Update. A Globe and Mail Online report has this explanation for the downturn:
Gold GC-FT fell below $1,130 (U.S.) an ounce Tuesday, losing 2 per cent as the news of China's tightening monetary policy curbed economic optimism, triggering heavy technical selling.In other words, there was a scramble for the exits when it became clear that gold wasn't moving upwards today, but downwards. Not mentioned was the possibility that some short sellers helped the process along by a hit-the-stops maneuver.
“Gold's decline has a lot to do with China's raising reserve requirements. It was massive liquidation after prices fell below important technical levels,” said Bruce Dunn, vice-president of trading at New Jersey-based Auramet.
This other report, from GoldAlert.com, explicitly notes that the U.S. dollar was not the cause of the gold plummet. It does note that several other commodities, such as oil, silver, three agricultural staples and copper, also plummeted today. Like the Globe report, this one attributes the drop to nervousness over the People's Bank of China tightening reserve requirements for Chinese banks.