Gold closed more than 3 percent lower on Thursday at its lowest closing price since August 2010 as the Federal Reserve
took its first step away from the ultra-loose monetary policy that has
helped drive bullion prices to record highs in recent years.
The Fed said on Wednesday that the U.S. economy was finally strong enough for it to start scaling back its massive bond-buying scheme, winding down the era of easy money that saw gold rally to $1,920.30 an ounce in 2011.
The metal was the hardest hit of the major financial benchmarks by the taper, with European stocks rebounding 1.5 percent on Thursday, the dollar index rising 0.6 percent, and bonds little changed.
Spot gold was last down 1.8 percent to $1,196 an ounce, having earlier touched its lowest since late June, at $1,192.30. U.S. gold futures for February delivery settled 3.4 percent lower at $1,193.60, its lowest settlement prices since Aug. 3, 2010.
"A lot of gold investors are anticipating deflation not inflation as a result of the Fed announcement, taking advantage of the downside momentum and shorting gold at least temporarily,'' said Jeffrey Sica, chief investment officer of New Jersey-based Sica Wealth, which has more than $1 billion in client assets.
The Fed said on Wednesday that the U.S. economy was finally strong enough for it to start scaling back its massive bond-buying scheme, winding down the era of easy money that saw gold rally to $1,920.30 an ounce in 2011.
The metal was the hardest hit of the major financial benchmarks by the taper, with European stocks rebounding 1.5 percent on Thursday, the dollar index rising 0.6 percent, and bonds little changed.
Spot gold was last down 1.8 percent to $1,196 an ounce, having earlier touched its lowest since late June, at $1,192.30. U.S. gold futures for February delivery settled 3.4 percent lower at $1,193.60, its lowest settlement prices since Aug. 3, 2010.
"A lot of gold investors are anticipating deflation not inflation as a result of the Fed announcement, taking advantage of the downside momentum and shorting gold at least temporarily,'' said Jeffrey Sica, chief investment officer of New Jersey-based Sica Wealth, which has more than $1 billion in client assets.
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