NEW YORK (MarketWatch) -- Gold futures fell below $910 an ounce Thursday, as optimism that global leaders meeting in London are taking measures to tackle the global financial and economic crisis curbed back investors' need to seek safe assets, such as gold.
Gold's losses came amid big rallies in global stocks and crude-oil futures. Industrial metals such as copper also made gains on speculations that the economic crisis may have bottomed.
"With the markets pricing in the thought that we may be seeing some upside movement out of this recession, I think that some of the flight to quality trade is leaving gold and bonds today and moving into stocks, crude and foreign currencies," said Zaharay Oxman, managing director at TrendMax Futures.
Gold for April delivery fell $21.60, or 2.3%, to $904.50 an ounce on the Comex division of the New York Mercantile Exchange. The more active June contract lost $20.80, or 2.2%, to $906.90.
Despite the loss, gold prices still remained supported by a weaker dollar, which came under selling pressure against the euro after the European Central Bank cut interest rates by a smaller than expected amount. Gold, a dollar-denominated asset, is more attractive to holders of other currencies when the dollar falls.
Thursday's losses in gold reversed the metal's gains in the previous two sessions. The metal is now down more than 2% so far this week. Prices are now about $100 lower than their recent high above $1,000 hit on Feb. 20.
George Gero, a precious metals trader for RBC Capital Markets said gold could fall below $900 in the short term if stock markets remain strong. Recent gold selling by the ECB and weak imports in India also helped gold prices slide, he said.
The ECB said Wednesday it had completed the sale of 35.5 tons of gold, in full conformity with the second Central Banks Gold Agreement, which was signed in 2004 by the ECB and other European major official gold holders. The ECB didn't elaborate how it plans to use the proceeds.
Leaders from the world's most powerful and emerging countries were working toward an agreement to at least double the International Monetary Fund's rescue capabilities and to sanction countries that fail to comply with a crackdown on bank secrecy rules.Progress on those issues comes as disputes over the need for additional fiscal stimulus spending and measures to strengthen international oversight of the financial sector threatened to dominate the crisis summit of Group of 20 leaders