Gold prices took a big hit Thursday, falling nearly $30 as the dollar rose and investors bet that the greenback will continue to strengthen.

Gold for February delivery tumbled as low as $1,098 an ounce on the New York Mercantile Exchange _ the first time it traded below $1,100 in more than a month. The metal closed down $28.80 to $1,107.40 an ounce, a 2.5 percent drop from Wednesday.

The sharp sell-off was triggered by a surge in the dollar, which rose amid growing concerns over rising debt levels in Europe and discouraging corporate outlooks. The prospect of higher interest rates also boosted the greenback.

On Wednesday, the Fed left its benchmark interest rate at a historic low of near zero, but said it expects to start unwinding some of its stimulus measures early next year, as planned. That was a signal to investors that the Fed may be forced to raise rates sooner than expected to ward off inflation. Higher rates would be a positive for the dollar.

Investors dumped risky assets and sought shelter in safe harbors like the dollar and Treasurys.

The dollar rallied to a three-month high against the euro, and Treasury prices soared, as major stock indexes tumbled more than 1 percent. The Dow Jones industrial average lost 133 points.

For much of this year, trading has been characterized by a weaker dollar and higher stock and commodity prices. Low interest rates help spur economic activity by making borrowing costs low. But they also tend to weaken a country's currency, encouraging investors to buy assets that can earn better returns than cash.

That trend has begun to reverse in recent weeks as the dollar steadies. Investors want to lock in gains they've made this year in stocks and commodities and are taking on less risk.

"Commodity prices in general are suffering as the flight-to-safety trade resumes," said Matt Zeman, head trader at LaSalle Futures in Chicago. "This whole month has really been about investors shedding risk."

Gold benefited from the dollar's decline more than other commodities this year because of its use as a hedge against inflation and a weak greenback. After rising to a record high of $1,227.50 earlier this month, gold has fallen about 10 percent.

Despite gold's recent pullback, some analysts believe it has more to run and that investors will begin to add more gold to their portfolios at the start of the new year.

"This is not indicative of a broad sell-off in gold," said William Rhind, strategic director at ETF Securities.

Other metals also fell sharply Thursday. March silver plunged 49.8 cents, or nearly 3 percent, to $17.195 an ounce, while January platinum dropped $31.70 to $1,425.90 an ounce.