Gold Prices Dip Despite China's Return to the Market (Update 1)

NEW YORK (TheStreet) -- Gold prices on Tuesday extended their losing streak to four days, despite support from China having re-entered the market after a week-long holiday. Gold plummeted 1.6% on Friday.

Gold for April delivery shed $5.30 to settle at $1,604.20 an ounce at the Comex division of the New York Mercantile Exchange. The gold price traded as high as $1,618.80 and as low as $1,600.20 an ounce, while the spot price was dropping $4.90, according to Kitco's gold index.

"I think we're seeing a bit of support from the Chinese coming back into the market, yesterday and this morning," Peter Hug, director of global trading at Kitco Metals, said in an interview.

Prices sank four of five trading sessions last week as mainland China celebrated the Lunar New Year holiday. China provides large physical demand for the precious metal, but the country's step back into the market was failing to turn around Friday's abysmal performance.

"Friday was a perfect storm: you had four or five fundamental news stories such as the Commodity Futures Trading Commission indicating speculative positions were increased, the World Gold Council suggesting that supply and demand equations for gold were less favorable in 2012, some of the big names in the industry such as Soros lightening up on their gold positions," said Hug.

Selling arrived Friday after George Soros' fund revealed it pared holdings in gold ETFs, and as Julian Robertson of Tiger Management eliminated his position in gold-miner ETFs.

Silver prices for March delivery were dipping 46 cents to $29.39 an ounce, while the U.S. dollar index was shrinking 0.21% to $80.46.

Gold investors were awaiting the Federal Reserve's policy-making minutes, which are slated for Wednesday. Though most analysts do not expect a significant change in the loose-easing policy, the minutes could still provide more color on how much longer central bankers intend to implement the open-ended easing programs.