Prices drop below $700 an ounce on Nymex for the first time in three weeks SAN FRANCISCO (MarketWatch) -- Gold futures dropped below $700 an ounce Thursday for the first time in three weeks, extending their losing streak to three sessions as recent weakness in the U.S. stock market prompted investors to take more money off the investment table. But prices for the precious metal turned higher in electronic trading as the Dow Jones Industrial Average rallied. The index climbed more than 500 points Thursday after touching a low below 8,000 for the first time since Oct. 10 and falling for three days in a row. "Markets, all of them, seem to be acting as if the hedge fund liquidation may have hit a cataclysmic bottom," said Ned Schmidt, editor of the Value View Gold Report. "With the Federal Reserve pumping funds as fast as they can, gold has extremely good fuel for a run higher [in] 2009," said Schmidt. December gold climbed to $734.40 an ounce on Globex as of 4 p.m. EST Thursday, after closing at $705 an ounce, down $13.30, or 1.9%, on the Comex division of the New York Mercantile Exchange. For now, "if this rally is able to sustain itself, the Dow should rally to at least the 9,500 level and I expect gold to be able to rally back above the $900 level," said Dale Doelling, chief market technician at Trends In Commodities. "This is all dependent upon what happens tomorrow. If this ends up being a one-day event, all bets are off." Earlier Thursday, December gold touched a low of $698.20 an ounce in electronic trading on Globex, marking its first decline below $700 since Oct. 23. And gold prices tallied a loss of more than $41 an ounce during a losing streak that's so far spanned three-straight sessions. "Spot gold is down over 30% since the March high and is following oil down," said Mark T. Williams, a risk management expert and finance professor at Boston University. Crude futures touched a low below $55 per barrel Thursday with energy demand concerns pulling prices to 22-month lows but finished the trading session higher. See Futures Movers. Metal support The precious metal had posted gains early Thursday in electronic trade after news that the German economy, the largest of the euro zone, is now in recession. See full story. In Japan, the Nikkei fell sharply and more worrisome trends were revealed in U.S. weekly jobless claims. See full story. "We received additional news about the global recession, as Germany declared the country is in a recession," said David Beahm, a vice president at precious metals retailer Blanchard & Co. said in emailed comments. "As the economic crisis sweeps the globe, the only option that central banks will have to save their economies will be to dump liquidity into the markets." And "as inflation rises across the world, investors will be looking for portfolio protection," he said. "Gold will be the asset that protects and builds wealth during this period of what could be hyper-inflation." On Comex Thursday, other metals finished the regular trading session lower along with gold. December silver fell 68 cents, or 7.2%, to close at a two-week low of $8.80 an ounce. January platinum lost $12.10 to end at $813 an ounce and December palladium fell $2.05 to close at $213.95 an ounce. December copper closed at $1.624 a pound, down 3.1 cents. Metals equities moved in tune with the broader market rally. The Amex Gold Bugs Index , which tracks the share prices of major gold companies, jumped 13.2% to close at 198.61. The iShares Gold Trust closed at $72.40, up 2.9% and the Market Vectors-Gold Miners ETF added 11.7% to finish at $21.66. The iShares Silver Trust ETF lost 1.4% to end at $9.30.

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