Gold slides after Fed ‘twist’ disappoints

At 3:35 p.m. EDT (1935 GMT), spot gold, which tracks trades in bullion, was at $1,780.10 an ounce versus Tuesday’s last registered trade of $1,803.25. It had fallen earlier to a session low of $1,778.30.

In US gold futures, the benchmark December contract was below $1,785 after closing the official session at $1,808.10 versus Tuesday’s settlement of $1,809.10. The session high was $1,819.40, while the low was $1,781.30.

Gold’s inverse correlation with the dollar has returned after weakening for most of the past month or so. That has exacerbated price swings, causing intra-session moves of more than $50 in recent weeks.

So far this year, gold is up almost 30 per cent, although it is headed for a 1 per cent loss in September due to profit-taking from record highs above $1,920.

It would be gold’s first monthly decline since June, although the precious metal remained headed for its strongest quarterly gain since 1986.

An anonymous survey of delegates at the London Bullion Market Association’s annual conference on Tuesday put a $2,019 target on bullion by November 2012.

Gold prices have been buoyed by euro zone debt troubles and the perceived fragility of European banks.

“Once the Fed (statement) is out of the way, market players should focus more again on the euro zone debt crisis and whether or not Greece will default … this should be very supportive again (for) gold,” saidCommerzbank analyst Daniel Briesemann. – Reuters

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