Gold Drops Under $890; Platinum Sinks

Gold futures continued their downward trend Friday as investor optimism decreased demand for the safe-haven metal.

June futures, the most active contract, were slipping $6.20 to $885 an ounce at the Comex division of the New York Mercantile Exchange. Silver futures were rising 2 cents to $12.33 an ounce, and copper was relatively flat at $2.06 a pound.

The three major U.S. indices reported sizable gains for April. As global markets continue to stabilize, investors' appetite for risk increases and their demand for gold as a safe haven investment can diminish.

"Gold will get under $850 this summer and silver under $12", says David Morgan, founder of Silver-Investor.com. "The metals have probably hit their peak in February of 2009 [and we] might get back to [that] level by the end of 2009."

Until then Morgan says "deflationary pressures ... in the U.S. will continue to put price pressure on all asset groups."

Morgan predicts that summer lows will be the best entry point for long-term gold investors. Morgan thinks there's a 50/50 chance that silver will top $21 an ounce in the first quarter of 2010 and gold will break $1,000 in the fourth quarter this year. He also sees steady investment demand despite weak physical orders.

Two years ago, he says, a large gold order was $50,000. Now, a gold order can range anywhere from $250,000 to $1 million as more high net worth individuals move into the gold market.