Gold dropped below $1,200 an ounce to a five-month low as the Federal Reserve trimmed economic stimulus, reducing demand for a store of value. Silver tumbled.
The Fed will cut monthly asset purchases to $75 billion from $85 billion, “reflecting cumulative progress and an improved outlook for the job market,” Chairman Ben S. Bernanke said yesterday after officials concluded a two-day meeting. Gold rose 70 percent from December 2008 to June 2011 as the Fed pumped more than $2 trillion into the financial system.
Gold futures for February delivery fell 3 percent to $1,197.50 an ounce at 10:49 a.m. on the Comex in New York after dropping to $1,192, the lowest since June 28. Prices tumbled into a bear market in April and are heading for the first annual decline in 13 years, as investors lost faith in the metal. Through yesterday, futures plunged 36 percent since reaching a record $1,923.70 in September 2011.
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