Gold Drops to 10-Week Low on Reducing Safety Demand, Firm Dollar

Gold futures on the COMEX Division of the New York Mercantile Exchange touched its lowest level since January 22 on Monday as the safety appeal was reduced by economy recovery anticipation, strong dollar and weak oil. Silver and platinum went down, too.

Gold price for June delivery plunged 24.50 U.S. dollars, or 2.7percent, to settle at 872.80 dollars an ounce. Earlier in the session, it plummeted to 10-week low of 865 dollars. In a three-day slump since last Thursday, gold has dropped more than 50 dollars an ounce amid hopes the economy recovery is on the way.

Investors are more optimistic to expect the economy to recover in the near future, especially after the G20 summit meeting, said analysts. This apparently weakened gold's appeal as an option to hedge the risk of economic crisis. The safety demand of gold also decreased due to a firm dollar and weak oil.

The dollar rebounded in mid-morning against euro, rising away from a 10-day low of 1.3577 dollars and touching as high as 1.3359dollars for the session. However, Crude oil for May delivery fell more than 2 dollars per barrel by the end of gold's floor trading time.

Concerns about IMF will sell 403.3 tons gold to help raise 50 billion dollars for the poorest countries over the next two to three years, also pressured the precious metal although the sale is still to be determined before being put into practice.

May silver finished at 12.11 dollars per ounce, down 62.5 cents. July platinum dropped 13.70 dollars to 1,152.60 dollars per ounce.