Investing.com - Gold prices dropped on Wednesday in a knee-jerk
selloff after the Federal Reserve announced it was trimming its
monthly bond-buying program to $55 billion from $65 billion.
Fed bond purchases spur recovery by suppressing interest rates,
weakening the dollar in the process while making gold an attractive
On the Comex division of the New York Mercantile Exchange, gold
futures for April delivery traded at $1,332.20 a troy ounce during
U.S. trading, down 1.97%, up from a session low of $1,3330.90 and
off a high of $1,360.10.
The April contract settled down 1.01% at $1,359.00 on
Futures were likely to find support at $1,328.20 a troy ounce,
the low from March 10, and resistance at $1,393.80, the high from
The Fed earlier said it was leaving interest rates unchanged and
reduced the amount of bonds it buys in the open market each month
to $55 billion from $65 billion, both moves in line with
The news sent gold falling, as the Fed's asset-purchasing
program, which kicked off in 2012 at $85 billion a month, has
supported the yellow metal by weakening the dollar.
Elsewhere, the Fed omitted previous language calling for rate
hikes if the unemployment rate approaches a 6.5% threshold, a
policy tool known as forward guidance.
Even though the economy is improving, a highly accommodative
monetary policy stance remains appropriate, the U.S. central bank
Still, gold remained lower on sentiments that even though
interest rates may remain low for time to come, stimulus tools such
as bond purchases are on their way out.
Meanwhile, silver for May delivery was down 1.24% at US$20.603 a
troy ounce, while copper futures for May delivery were up 0.99% at
US$2.981 a pound.
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