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Gold prices sink as Wall Street stages huge rally

Gold prices sink as Wall Street stages huge rally

Gold prices tumbled Tuesday, closing below $900 an ounce for the first time in a month, as investors returned to Wall Street in force on news that troubled Citigroup Inc. has been operating at a profit.
Oil prices fell on a government report forecasting weak demand, while grain prices rose in tandem with the gains in equities.
Demand for gold, which is often seen as a safe-haven investment, suffered amid an increase in risk appetite as investors scooped up beaten down stocks. The equities market made its first big advance in weeks on word that Citi is having its best quarter since the last time it recorded a profit for a full period in 2007.
Gold prices soared in the beginning of the year as fears about the global financial crisis heightened. But in recent weeks, as the unrelenting selling on Wall Street continued, market participants have dumped investments across the board, including gold. On Tuesday, however, gold suffered as stocks rallied and investors moved more funds out of the precious metal and back into equities on renewed hopes for the banking sector.
"There is a lessening of some of the concerns that had been a backdrop to the big rally we had seen in gold," said Stephen Platt, an analyst with Archer Financial Services. Adding to the selling pressure, Platt said, is the feeling that gold prices had risen too high too quickly.
"I think it's a reflection that people were price sensitive, people realizing it was overbought," he said.
Gold for April delivery shed $22.10 to settle at $895.90 an ounce on the New York Mercantile Exchange. Prices have fallen 10.6 percent since Feb. 20 when they hit a high of $1,002 an ounce.
May silver sank 40 cents to $12.54 an ounce, while May copper futures rose 4.5 cents to $1.6845 a pound.
On Wall Street, the Dow Jones industrial average soared 379 points, or 5.8 percent, to 6,926.49. Both the Standard & Poor's 500 index and the Nasdaq composite index rose more than 6 percent.
The dollar was higher against the British pound and the Japanese yen, but lost ground against the euro.
Oil prices gave up early gains on the Nymex after the government lowered its forecast for global energy demand and said average oil prices will likely fall below current levels this year.
Light, sweet crude for April delivery fell $1.36 to settle at $45.71 a barrel.
Gasoline futures fell 3.79 cents to $1.2972 a gallon, while heating oil futures fell 1.67 cents to $1.1987 a gallon.
Grain prices rose on the Chicago Board of Trade, buoyed by the gains on Wall Street.
May wheat futures rose 9.5 cents to $5.3275 a bushel, while corn for May delivery added 10 cents to $3.7550 a bushel.
Soybean futures rose 12 cents to $8.77 a bushel.