The gold price dropped $5.01 to $1,062.54 as the price of gold could not sustain positive momentum despite a slightly weaker U.S. dollar. Gold stocks followed the gold price lower, with the Market Vectors Gold Mining ETF (GDX) falling $1.63, or 3.8%, to $40.78. The fall in the GDX erased a large portion of Friday’s 5.4% rally - the largest one-day gain for the GDX in three months. Canada’s S&P/TSX Global Gold Index, the most widely followed basket of gold stocks in Canada, declined $10.36 to $304.49 as Canadian-based gold stocks succumbed to selling pressure.

With today’s sell-off, the price of gold is now lower by $19, or 1.8%, in the month of February - after having fallen 1.4% in January and 7.2% in December. The gold price has not experienced three consecutive monthly declines throughout the entire gold bull market that began in 2001. January through March 2001 - when the price of gold traded below $275 per ounce - was the last time the gold price was down three months in a row. A third straight lower month for the price of gold could portend further weakness for the gold price in 2010.

While there have been numerous calls the recent strength in the U.S. dollar is signaling an end to the gold bull market, one could alternatively view the $164 drop in the price of gold since early December as a healthy correction that has served to shake out weak hands and latecomers. In spite of the recent decline, the gold price has thus far held above the psychologically important $1,000 level, as well as above the previous all-time high of $1,033 - two positive signs.

Moreover, as noted on many occasions by Richard Russell of Dow Theory Letters - one of the first and best known gold bulls - the sharpest corrections generally occur in the context of a bull market, and the goal of the bull is to bring along the fewest participants as possible.