Gold slips as dollar rises, stocks fall

Gold prices fell Tuesday as a stronger U.S. dollar and a still-volatile stock market prevented traders from making any big bets on precious metals.

Stocks that tumbled on weak results from U.S. retailers and ongoing concerns about tightening credit depressed gold, silver and industrial metals including copper. The drop on Wall Street prompted some investors to take money out of riskier markets like commodities and put it in safer assets such as government securities.

As the Dow Jones industrial average fell more than 200 points, the 10-year Treasury note rose, pushing down its yield to 4.74 percent from 4.78 percent late Monday. The market's volatility continued even after the European Central Bank made another huge infusion of cash into its banking system. The ECB has provided the market with about $288 billion over the past few days, and the Federal Reserve and the Bank of Japan have made similar, albeit smaller, moves.

"The potential iceberg collision may have been averted for the moment, but these remain dangerous waters for the economic and market ships to find themselves in," wrote Kitco Bullion Dealers analyst Jon Nadler in a note to clients. He noted that gold traders have a "wait-and-see attitude" right now, as the stock market attempts to find its footing.

Also, gold tends to weaken when the dollar strengthens - on Tuesday, the U.S. currency rose against both the euro and the pound after the United States said its trade deficit narrowed to a four-month low in June.

December gold fell $1.20 to finish at $679.70 an ounce, while September silver fell 10.7 cents to $12.748 an ounce. October platinum fell $10.10 to $1,277.00 an ounce.

The energy markets pushed higher ahead of Wednesday's inventory report from the Energy Department, as worries about a developing Atlantic tropical storm eventually trumped concerns about falling stocks. Most of the nation's oil and natural gas facilities are located along the Gulf Coast. The National Hurricane Center said Tuesday that Tropical Storm Dean had formed in the open Atlantic.

Light, sweet crude for September delivery rose 76 cents to settle at $72.38 a barrel on the New York Mercantile Exchange. September gasoline futures rose 3.63 cents to end at $1.9738 a gallon. September natural gas rose 14.6 cents to finish at $6.94 per 1,000 cubic feet.

In industrial metals, traders had taken advantage of bargain prices on Monday following last week's sharp declines. On Tuesday, however, the metals weakened along with stocks, hurt in part by lower-than-expected economic growth in Europe, according to daily commentary from BNP Paribas.

Lead, which fell 12 percent last week, ended slightly higher on the London Metal Exchange, but copper, tin, aluminum, nickel and zinc all finished lower.

"There is still too much uncertainty in most financial markets, typified by the large intraday swings in the bond and stock markets, to bestow any sense of normalcy to trading right now," wrote Anita Khar of MF Global UK Ltd. in a note.

Nymex copper for September fell 7.10 cents to $3.3700 a pound.

In Chicago, agriculture prices finished mixed.

Wheat for September delivery rose 26 cents to end at $6.9250 a bushel; December corn fell 4 cents to $3.45 a bushel; December oats rose 1 cent to $2.60 a bushel; November soybeans fell 15.75 cents to $8.66 a bushel.