Gold prices fell for the third day in a row on Tuesday as the U.S. dollar continued to strengthen.

February gold fell $32 to settle at $1,131.40 an ounce. Gold prices have tumbled 7% since hitting an all-time high of $1,218.30 on Thursday.

The retreat came as the U.S. dollar regained ground against rival currencies, undermining demand for gold as an alternative investment.

"The dollar is strong today, and gold has been trading against the dollar," said Joe Foster, portfolio manager for the Van Eck Global International Investors Gold Fund. He said prices could continue to decline for the next few weeks before climbing anew next year.

The dollar gained 0.9% versus the euro to trade at $1.4693, its highest in over a month. The greenback was up 0.1% against the UK pound at $1.6274.

Wednesday, the yen rose to new multi-day highs against its major counterparts as a fall in global stock prices prompted investors to seek the safety of the Japanese currency.

World stock markets extended their losses today as Japan's much weaker-than-expected economic growth and rising debt loads around the world added to concerns the global recovery was faltering.

Investors in Asia were rattled after Japan downwardly revised its economic growth for the third quarter today to reflect a marked worsening of domestic demand in the country.

The Cabinet Office announced that gross domestic product expanded just 0.3% quarter-on-quarter in the third quarter, revised down from the 1.2% growth estimated initially.

Economists had expected the GDP growth rate to be revised to 0.7%.

After falling sharply Tuesday, European markets added to their losses, with benchmarks in Germany, Fra

The USD and JPY went strongly bullish in yesterday's early morning hours, no doubt a remnant of the dire reports from the global economy faced last week. The sudden boost in risk aversion at the opening of London's market yesterday morning sounded a bell for the return of the safe-havens. However, upon the opening of US markets, economic data spurred investors back to life with positive results which made the safe-haven charge appear pre-mature. The question now is whether the gains recovered by the EUR and GBP can continue today.




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