Gold prices fell sharply

Gold futures fell Tuesday as upbeat U.S. retail sales data dimmed expectations for more monetary easing from the Federal Reserve.

Gold futures turned lower after data showed U.S. retail sales rose for the first four months in July, a good sign for the consumer driven economy. The Commerce Department reported retail sales rose 0.8% in July, more than economists' expectations for a 0.2% increase.

In response, the U.S. dollar gained and gold briefly fell below the $1,600 a troy ounce mark for the first time in more than a week, moves traders attributed to weakening expectations for more Federal Reserve support for the U.S. economy.

The benchmark contract fell as low as $1,593.60 an ounce, the lowest intraday price since Aug. 3.

Weakening U.S. economic growth in recent months has spurred speculation that the central bank would ease monetary policy. Such moves can draw investors into gold and other precious metals on the view that the increased liquidity in the financial system would hit the value of paper currency.

Gold fell Monday, as investors cut bets on central bank action, and demand worries about major consumer India mounted. Executives there said gold imports may fall by about 30% this year, partially the result of a weak local currency that keeps the gold price near record highs despite the decline in dollar-denominated metal during the last year.

The cost of the August gold futures on the COMEX today reached a low of 1591.2 dollars per ounce, and then increased slightly and is now trading at around 1600.1 dollars per ounce.