Gold slides to 3-month low on dollar rise

Gero also cited a lower open interest in the U.S. gold futures market, larger gold delivery notices and chart-based selling below $880 an ounce for bullion's drop.

Spot gold has been trading well below its lifetime high of $1,030.80 an ounce hit on March 17, with attempts to revisit the level resulted in heavy profit-taking by investors.

U.S. gold futures for June delivery on the COMEX division of the New York Mercantile Exchange settled $18.70, or 2.1 percent, at $876.80 an ounce on Tuesday.

In industry news, Penoles (PENOLES.MX), Mexico's largest producer of refined silver, declined sharply on Tuesday, falling 6 percent one day after the company posted a slight drop in first-quarter net profit.

Silver fell to $16.48/16.57 from $16.96/17.02 an ounce late in New York on Monday.

Other precious metals also fell, with spot platinum dropped sharply to $1,909.50/1,929.50 an ounce from $1,964.50/1,974.50, while palladium dropped to $419/427 an ounce from $432.50/438.50 in the U.S. market late on Monday.