Gold sinks below $1,200, lowest in 3 years
NEW YORK (AP) -- The price of gold slumped below $1,200 an ounce Thursday, the lowest in more than three years, a day after the Federal Reserve said it would pull back on its stimulus program.
Gold for February delivery plunged $41.40, or 3.4 percent, to $1,193.60 an ounce. It hadn't closed below $1,200 an ounce since August 2010.
Gold went as high as $1,900 an ounce in August 2011 partly because traders feared that the Fed's efforts to support the U.S. economy with easy money policies would cause inflation. That never happened.
The latest plunge came a day after the Fed said it would reduce its bond purchases next month, further dissipating concerns about inflation.
The Fed also noted that the U.S. economy was improving and that the drag on the economy caused by budget policies in Washington could be diminishing.
Fears of inflation, political gridlock, a weak economy - all three were "stool legs" for the run-up in gold prices in recent years, Kitco Metals analyst Peter Hug wrote in a note to investors.
With all three no longer as much of a threat, in the view of the market, gold has continued to slide, Hug said. Gold is down 29 percent so far this year and is heading for its first annual loss since 2000.
The price of silver also fell sharply. The March contract fell 87.3 cents, or 4.4 percent, to $19.186 an ounce.
High-grade copper for March delivery fell 2 cents, or 0.7 percent, to $3.2955 a pound. March palladium fell $3.15, or 0.5 percent, to $693.30 an ounce and January platinum fell $24.30, or 1.8 percent, to $1,318.40 an ounce.
In other trading, crude oil rose 97 cents, or 1 percent, to $98.77 a barrel.
Wholesale gasoline futures rose 4 cents to $2.74 a gallon and heating rose 2 cents to $3.03 a gallon. Natural gas rose 21 cents to $4.46 per 1,000 cubic feet.
Crop prices were mixed.
Corn for March delivery rose 5.5 cents, or 1.3 percent, to $4.305 a bushel, January soybeans rose 3 cents, or 0.2 percent, to $13.27 a bushel. March wheat fell 2 cents, or 0.3 percent, to $6.1075 a bushel.