Gold peaked at $800 early in Hong Kong yesterday, but declined from there through the London session and into the second hour in New York, then traded essentially sideways through the Globex, to finish at $769.90, down $25.10. Overnight, gold has fallen further.

Platinum was rangebound with a slight down bias, ending at $893/oz., down $5. Overnight, platinum is sharply lower.

Silver bottomed just after the New York open, but then completely diverged from gold, shooting higher into the Globex, and only coming back a little late in the day to close at $10.03/oz., up 30 cents. Overnight, silver is trending lower. (Click here for charts)

It was a day of contrasts among the precious metals, with platinum little changed, gold dropping and silver soaring. With gold, investors were clearly looking to the rampaging dollar for guidance, with a slipping oil price not helping out either.

The Hightower Report wrote of the day’s action: “The gold market remained under pressure throughout most of the trading session on Tuesday. In fact with a another new high in the US dollar, ongoing deflation expectations and moderate weakness of the US equity market gold appeared to be just another physical commodity market facing a sagging demand outlook. While some polls had hoped that the CDS unwinding would result in fresh financial sector anxiety, the only anxiety present in the gold market on Tuesday seem to be coming from fears of too much economic slowing ahead. With a sharp slide in oil prices and general weakness in a host of other physical commodity markets, this fear of ongoing deflationary selling was certainly prominent.”

There isn’t much optimism to be found at the moment. Even gold bull James Moore, of TheBullioinDesk.com, warns that gold is “vulnerable” to liquidation of long positions, and he thinks that could take it as low as $750.

The dollar/gold tie is evident when one considers that against a weighted basket of six major currencies, the dollar is up 9.6% this year, while gold has dropped 8.4%.

No mistaking how that plays out. “The dollar is in demand around the world,” said Leonard Kaplan, of Prospector Asset Management in Evanston, Illinois. “That means everything comes down, including gold.”

Reflecting the recent price decline, investment in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, fell 1.9% to 756.3 metric tons yesterday, down from a record 770.6 metric tons on October 10.

Source: Gold stuck in the doldrums -  But silver shoots higher.