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 USD 1,920.30 an ounce in 2011.
Spot gold was down 1.2 percent at USD 1,203.85 an ounce at 1000 GMT, having earlier touched a low of USD 1,200.25. U.S. gold futures for February delivery were down USD 32.00 an ounce at USD 1,203.00.
That move came despite the Fed blunting its taper with a continued dovish message on interest rates – that tapering was not tightening.
“This is another sign of increasing normalisation for the world economy,” Macquarie analyst Matthew Turner said. “Gold’s insurance function is less desirable in that environment.”
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