Gold plummeted to its lowest level in 2 1/2 months as traders continued to drift away from the safety investment amid hopes the economy could be on the mend. The metal has now lost nearly $55 an ounce in a three-day slump.

June gold finished at $872.80, down $24.50 for the session. Gold earlier hit as low as $865, its lowest level since Jan. 23 for the most-actively traded contract.

The dollar rebounded modestly against other majors on Monday, reducing gold's hedge value. The greenback rose off of a 10-day low versus the euro and also recouped some of its recent skid versus the pound.

There was no major economic data scheduled for release on Monday. Things will pick up on that front later in the week as Wednesday will bring wholesale trade data while import and export prices will be announced on Thursday.

Meanwhile, President Barack Obama told Turkish lawmakers Monday that he stood behind their bid to join the European Union. The president also stressed that the U.S. remains a friend to the Muslim world, even as the country fights Islamic terrorism.

In other news, the U.S. Treasury Department has extended the deadline for applications to its public-private initiative to buy up distressed assets from banks. The deadline has been pushed out two weeks until April 24.

Crude oil prices also dropped, further lowering gold's hedge appeal. Light sweet crude finished at $51.05, down $1.46 for the session.

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