Comex gold tumbled on Wednesday as the dollar rose further after the US government reported the smallest trade deficit in 13 months and released data showing pipeline inflation remains quiescent.
Gold dropped below $420 an ounce for the first time in four sessions and silver took an even bigger fall in gold's wake.
February gold at 9:35 am EST (1435 GMT) was down $4.30 at $419.70 an ounce, trading between $425.40 and $418.00.
Spot gold fetched $418.55/9.25, off from the close at $423.25/4.00.
London's afternoon fix was $419.50. The dollar rose $1.2663/70 per euro from $1.2769/75 late on Tuesday, making gold less affordable to European investors.
The dollar was already fighting back from Tuesday's record low against the euro before the Commerce Department said the international trade gap shrunk to $38.01 billion in November from October's $41.58 billion.
The Labour Department's Producer Price Index rose 0.3 percent, a tad more than the 0.2 percent gain expected. But core PPI minus food and energy fell 0.1 percent.
"Together (they were) dollar positive. Stock futures firmed up on it so we sold off," said James Pogoda, a vice president at Mitsubishi International Corp, reporting stop-loss selling below $420 in spot gold and $6.50 in silver.
Federal Reserve Chairman Alan Greenspan said on Tuesday he did not see any problem funding the giant US trade deficit, alleviating one of the main worries about the dollar.
He spoke a day after the European Central Bank said it was worried about the strength of its currency, which could erode the international competitiveness of the euro zone.
Gold hit a 15-year high last week of $431.50 as the euro established one record high after another against the dollar. Dealers said they expect gold to continue rallying if the dollar falls again.
Pogoda said $418 was strong support, having been important resistance on the way up. "If that breaks, we could see some further long liquidation," he added.
March silver was down 13.7 cents at $6.46 an ounce, trading from $6.625 to $6.37. The fall below $6.50 unwound some of silver's steep gains since New Year's Eve, when it broke above $6 for the first time in more than five years.
On January 12 it hit $6.795, its highest price since April 1998. Nymex April platinum was off $4.70 at $851.00 an ounce. Spot fetched $851.00/856.00.