Gold price drops

Prices of safe-haven gold dropped on Wednesday as easing fears of a further contagion from the global banking crisis whetted appetite for riskier assets.

Spot gold was trading 0.6 per cent lower at $1,961.80 per ounce, as of 0749 GMT, after rising 1 per cent on Tuesday. US gold futures slipped 0.5 per cent to $1,963.10.

"We've seen a natural retracement ... gold is pulling back after a failed 'bid' to break above $1,975," said Matt Simpson, senior market analyst at City Index.

But some investors "still seem to be holding onto gold 'just in case' there's another skeleton or two lurking in the closet," Simpson said.

The dollar firmed, making bullion expensive for overseas buyers. Asian shares surged on Wednesday.

While gold would "ultimately" be supported by financial uncertainty, prices could become more volatile over coming weeks if inflation and U.S. economic data stay elevated, Simpson said.

Data on Tuesday showed US consumer confidence unexpectedly increased in March, while February's US trade deficit in goods widened modestly.