Gold prices dropped sharply Wednesday after a surprisingly strong report on new orders for durable goods dashed hopes of more easing from the Federal Reserve. Gold futures for December delivery tumbled $96, or 5.2 percent, to $1,765 an ounce – it's lowest level in a week. The retreat comes after a powerful rally in the gold market sent prices skyrocketing above $1,900 an ounce earlier this week. Gold started the year just above $1,400 an ounce. Investors have been flocking to the precious metal for weeks as global economic and debt concerns have weighed on riskier assets such as stocks. Gold is seen as a safe-haven asset and prices tend to spike when investors get nervous. More recently, the rally has been driven by expectations that the Federal Reserve would signal additional steps to support the economy, said Joe Foster, a portfolio manager for the Van Eck Global gold mutual fund. Fed Chairman Ben Bernanke is scheduled to make a highly-anticipated speech Friday at the Kansas City Fed's annual retreat in Jackson Hole, Wyo. The expectation, said Foster, is that the Fed will be forced to print more money to fund its activities, which would further undermine the US dollar and make gold more attractive. But a big jump in new orders for durable goods in July put a damper on those hopes Wednesday. The Commerce Department said orders for durable goods rose 4 percent in July, after slipping 1.3 percent the previous month. Economists were only looking for a 1.9 percent rise in orders. “The market thinks the strong durable goods number makes a Fed move less likely,” said Foster. “So there is no definitive recession read from these durable orders numbers for July,” said economists at Wells Fargo Securities in a research report. In addition, analysts said gold prices were ripe for a pullback given the recent run-up. “The sentiment has shifted somewhat,” said Carlos Sanchez, a precious metals analyst New York-based specialty commodities firm CPM Group. “But I think what you're seeing is a lot of squaring up as investors exit from profitable positions.” Sanchez said he expects prices to consolidate around $1,700 an ounce before moving back toward $1,900 again later in the year. Meanwhile, benchmark West Texas crude onWednesday rose 75 cents to $86.19 per barrel in afternoon trading in New York, while Brent crude was up $1.34 at $110.65 per barrel in London. The Dow Jones industrial average was down 37 points, or 0.3 percent, at 11,140, erasing a morning jump of 115 points. It gained 322 points the day before. The S&P 500 index fell 4 points, or 0.4 percent, to 1,158. It gained 38 points Tuesday, also its best day since Aug. 11. The Nasdaq fell 21 points, or 0.9 percent, to 2,424. Britain's FTSE 100 rose 1.9 percent to 5,227 points. Germany's DAX jumped 3.4 percent to 5,723 and France's CAC-40 added 2.4 percent to 3,158.