Gold falls slightly to settle at $1,808; copper hits 2011 low

Gold pared gains to settle $1 lower at $1808

Gold pared gains to settle $1 lower at $1808 after earlier posting gains after Moody’s cut the credit ratings of Bank of America and Well Fargo, saying it’s more likely now that during the financial crisis that the U.S. government will allow a large bank to fail should it become financially troubled.

The ratings agency also said the risk of contagion is also now less acute than during the crisis. The downgrades sparked a flight to perceived safe-haven investments such as gold, and sent shares of Bank of America [BAC 6.38 -0.52 (-7.54%) ] down sharply. Well Fargo [WFC 23.71 -0.96 (-3.89%) ] shares traded higher.

Gold had traded lower ahead of the outcome of a Federal Reserve policy meeting. The Fed announced it will sell $400 billion of its shorter-term securities to buy longer-term holdings in an effort to boost the weak economy.

Copper sagged to a new 2011 low on demand worries and fears the euro zone sovereign debt [cnbc explains] crisis may derail the global economy.

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