Precious-Metals Futures Off

Precious-metals futures prices took a dive Thursday with gold dropping below $400 an ounce in response to a strong bond market and a better performance by the dollar. On other markets, livestock, meat, soybeans and the grain futures suffered sizable losses.

“A strong bond market along with a fairly strong dollar brought in some selling of the metals,” said Peter Cardillo, an analyst in New York with Josephthal & Co. Treasury bond futures posted strong gains after the Commerce Department released January retail sales data showing a record 5.8% decline.

Cardillo said that while he disagrees with the assessment, the market took the retail sales figure as an indication that the economy is in bad shape, which would improve the chances of the Federal Reserve Board lowering interest rates.

The bond market rallied on this line of reasoning.

Cardillo said a good part of the slump in retail sales came from a depressed auto market, but the rest of the economy showed only a nominal decline. Grain and soybean futures prices suffered sizable losses on the Chicago Board of Trade. “Basically, it was a general debacle,” said Ted Mao, an analyst with Shearson Lehman Bros.