Gold for August delivery closed down 1.5% today, at $1,211.60 per ounce. But the really big news is what happened in electronic trading after the Comex closed for the day.

The August contract fell to $1,198.60, the first time since August 2010 that the most active contract has fallen below $1,200.

The yellow metal is losing its luster as equities and bonds continue to recover from last week’s sell-off following the FOMC meeting. The dollar index (DXY) has regained more than 2 points to trade as high as 83.17 today. The euro has dropped from 1.34 to 1.30 since last week as well.

Gold buyers who have been waiting for the market to turn steadily south and for inflation to shoot up continue to be disappointed. Rising interest rates and the soaring dollar have simply driven out most interest in buying and holding gold.

Even worse, the drop in gold prices is itself feeding further declines. If nobody wants to buy gold at $1,200 an ounce, then just how far down does it have to fall before it can attract anyone but the staunchest goldbug?

Looking for a safe haven? Think cash.

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