Gold futures fell sharply on Monday, the most in almost two weeks after the U.S. said it supports limited sales of gold reserves held by the International Monetary Fund.
Gold for April delivery fell $11.30, or more than 1 percent, to $936.60 an ounce on the Comex division on the New York Mercantile Exchange.
David McCormick, the IMF's Treasury's undersecretary for international affairs said on Monday, that some of its $98 billion gold in reserves should be sold to cover a revenue shortfall. T he IMF is the third-largest holder of the precious metal.
McCormick said the Bush administration considers to sell 12.9 million ounces of gold as probably the most viable option to ensure the long-term funding of the IMF, according to reports by the Dow Jones Newswires.
The support that the U.S. is now apparently lending to the recently proposed IMF gold sales - which is a departure from its previous negative stance on such sales - is causing a few to take profits, said Kitco Bullion Dealers' senior analyst, Jon Nadler, in a research note.
It is believed that the sales, slated to commence in April, might bring some 400 tons of gold out of the IMF vaults and onto the market, Nadler said.
The precious metal has more than tripled in the past seven years, gaining 12 percent this year and reaching an all-time high of $958.40 an ounce on Feb. 21. On Friday, gold finished down $1.40 but raked in a weekly gain of $41.70.
The dollar index, which measures the greenback against a basket of six major currencies, was at 75.573, up from 75.480 before the data and 75.514 in Friday's late U.S. trading.