Gold dipped below $400 Tuesday to $397.25 and appeared ready to test the key support level between $394 and $395, London-based metals analysts said.

In New York, gold ended 80 cents lower at $399.Less than three weeks ago gold was trading above $420, with talk of a possible break above $425. But the metal failed to make that move and in the

ensuing period dribbled back down in fits and starts towards $400.

The strength of the dollar has been a major factor in gold's falls. The U.S. unit surged on all fronts, and despite intervention from the central banks has maintained a very bullish tone.

Analyst Andrew Smith of UBS Phillips and Drew said the dollar's strength seems set to continue in the short term. East German elections approaching next weekend will likely mean continued uncertainty for the Deutsche mark, and Japanese hesitancy over raising interest rates could continue to undermine the yen, he said.

The weakness of Japanese stock markets has also been linked to recent falls in gold. Shaun Darby of Rudolph Wolf said falls in the Tokyo stock market have prompted investors to sell gold to cover equity margin requirements.

Others disagreed, however, and linked gold selling in Japan to the yen/ dollar exchange rate. The weaker yen meant the price of gold now appeared high to Japanese investors, and this encouraged selling pressure. This is seen as bearish for gold since it implies "further potential for liquidation from Japan" if the yen stayed weak.

Continuing high interest rates was also highlighted by analysts as a bearish influence. Neil Buxton of Shearson Lehman Hutton said recent economic pointers from the United States were indicative of a strong economy, and gave little reason to hope for an easing of credit policy.

More generally, gold's recent weakness has been linked to a general turnaround in sentiment towards the metal. Analysts said gold's failure to

break above $425 in any of the price run-ups which occurred in January and February led to an ebbing away of bullish support.

The rallies tended to fizzle out more quickly each time, perhaps indicating that physical support for gold was getting weaker.