Gold futures on the COMEX division of the New York Mercantile Exchange dropped sharply Wednesday, as both a stronger dollar and negative market atmosphere dominated trading.

The most active gold contract for April delivery lost 27 dollars, or 1.6 percent, to settle at 1,657.9 U.S. dollars per ounce.

Gold lost significant ground Wednesday after nearly reaching the 1,700-dollar-an-ounce level only Tuesday.

Analysts said that Wednesday morning's release of February durable goods data from the U.S. Commerce Department sent both gold and equities markets tumbling, as the orders came in below expectations.

Although durable goods orders rose 2.2 percent in February, economists had projected an increase of 2.9 percent.

The U.S. stock market and energy sectors reacted heavily to the disappointment, the Dow Jones Industrial Average losing more than 100 points and traders seeming to question global growth.

The dollar additionally gained strength Wednesday, and combined with the overall negative market atmosphere, put substantial pressure on gold trading.

Despite Wednesday's setbacks, those in the gold bull camp may still take some heart from U.S. Federal Reserve Chairman Ben Bernanke's comments Monday that the recovery from the U.S. economy was still at a delicate place, and that the Fed would continue its loose monetary policy.

April Platinum settled at 1,635.2 dollars per ounce, down 22.3 dollars, or 1.4 percent.