Gold slumped the most in almost three months, after a pair of reports indicated that the U.S. economy is strengthening.
U.S. manufacturing grew in November at the fastest pace in 2½ years as factories ramped up production, according to a survey from the Institute for Supply Management. Separately, U.S. developers boosted construction spending in October at the fastest pace in more than four years, the Commerce Department said.
The news gave the dollar a boost. Gold typically slumps when the U.S. currency strengthens, as traders generally hold the metal as a hedge against declines in the dollar.
Investors were also selling gold as the end of the tax year neared, given the strong gains for the U.S. stock market, said George Gero, a precious metals strategist at RBC Global Futures. The metal has slumped 25 percent this year, and any losses can be set off against other gains for tax purposes.
“Gold has been a very poorly performing asset and is a candidate for selling,” said RBC’s Gero.
Gold for February delivery fell $28.50, or 2.3 percent, to $1,221.90 an ounce. That’s the biggest single-day decline for the metal since Sept. 12.
Other metals also dropped, led by declines for silver.
March silver fell 74 cents, or 3.7 percent, to $19.29 an ounce. Platinum for April delivery dropped $22, or 1.6 percent, to $1,346.80 an ounce. Palladium for March fell $6.25, or 0.9 percent, to $713.40 an ounce. Copper for the same month dropped 2.25 cents, or 0.7 percent, to $3.18 per pound.
In agricultural trading, wheat and soybeans fell, while corn was flat.
Soybeans for January delivery fell 15.25 cents, or 1.1 percent, to $13.21 a bushel. Wheat dropped 7 cents, or 1 percent, to $6.62 a bushel. Corn settled at $4.25.