Gold fell 1% in thin trade on Thursday, a day after the Federal Reserve announced a further cut in its stimulus programme and reiterated its confidence in the US economic outlook despite weak first-quarter growth.
Outflows resumed from bullion-backed exchange-traded funds, suggesting investor confidence in the metal remains soft.
Optimism over the health of the US economy suggests the Fed will keep paring back its monetary easing programme, relieving downward pressure on long-term interest rates and taking the heat out of inflation fears. Gold is seen as a hedge against inflation risk.
Spot gold was down 0.8% at $1,282.41 an ounce at 09.43am GMT, having earlier touched a low of $1,277.78 an ounce, while US gold futures for June delivery were down $12.80 an ounce at $1,283.10.
Prices fell despite Wednesday’s soft reading of first-quarter US growth, which showed the severe winter hampered exports and led businesses to curtail investment spending.
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