Gold falls to 3-month low, Fed easing hopes wanes

NEW YORK/LONDON Wed Apr 4, 2012 12:10pm EDT

Gold Bullion from the American Precious Metals Exchange (APMEX) is seen in New York, September 15, 2011. REUTERS/Mike Segar

Gold Bullion from the American Precious Metals Exchange (APMEX) is seen in New York, September 15, 2011.

Credit: Reuters/Mike Segar

NEW YORK/LONDON (Reuters) - Gold fell to its lowest in nearly three months on Wednesday, tumbling for a second straight session as investors digested the latest Federal Reserve meeting minutes published Tuesday that lessened hopes for further monetary stimulus.

Silver and platinum group metals also slid. Gold, which tracked the sharp losses in equities and crude oil, has dropped 5 percent in the last six sessions after a strong run of U.S. economic data also dampened hopes of another round of monetary easing.

Bullion, which was on track for its biggest two-day decline since Feb 29, broke below its 300-day moving average for the first time in three months and could next test its critical technical level near the December lows below $1,550 an ounce.

"Gold responds better during periods of greater stress. And the last couple of months seemed to be a relatively stable and quiet period, and ," said Richard Hastings, macro strategist at investment bank Global Hunter Securities.

"If we were to break below $1,550, more significant doubts might emerge about gold's capability to regaining longer term price trends to the upside," Hastings said.

Spot gold was down 1.6 percent at $1,618.60 an ounce by 11:42 a.m. EDT (1542 GMT), having earlier touched a low of $1,612.30, its lowest since January 10.

U.S. gold futures for June delivery were down $51.70 an ounce at $1,620.20 in decent trading volume.

Spot silver down 3.6 percent at $31.46 an ounce,

Gold has fallen 3 percent so far this week, retreating more from the March high above $1,790 an ounce , when there were greater hopes for a third round of U.S. quantitative easing.

Ultra-loose monetary policy, which keeps real interest rates and consequently the opportunity cost of holding gold low, helped push the metal to record highs in 2011.

But minutes of the U.S. central bank's latest policy meeting published on Tuesday showed only two of the policy-setting Federal Open Market Committee's 10 voting members saw the case for additional monetary stimulus.

"I wouldn't be surprised if we push lower towards $1,600 - that is what we think is a floor and we are unlikely to fall substantially below that," Standard Bank analyst Walter de Wet said.

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Asset returns in 2012: link.reuters.com/muc46s

Commodity returns in 2012: link.reuters.com/faz36s

Gold correlation with dollar: r.reuters.com/ryx52s

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Other precious metals were weaker across the board, with spot platinum down 2.3 percent at $1,597.49 an ounce, and spot palladium down 1.7 percent at $637.72 an ounce. Prices at 11:42 a.m. EST (1542 GMT)

LAST NET PCT YTD

CHG CHG CHG US gold 1620.20 -51.70 -3.1% 3.4% US silver 31.465 -1.800 -5.4% 12.7% US platinum 1603.80 -56.70 -3.4% 14.6% US palladium 641.30 -18.30 -2.8% -2.3%

Gold 1618.60 -26.23 -1.6% 3.5% Silver 31.46 -1.16 -3.6% 13.6% Platinum 1597.49 -37.36 -2.3% 14.7% Palladium 637.72 -10.88 -1.7% -2.3%

Gold Fix 1621.00 -10.75 -0.7% 3.0% Silver Fix 31.98 -99.00 -3.0% 13.5% Platinum Fix 1616.00 11.00 0.7% 17.0% Palladium Fix 647.00 2.00 0.3% 1.7%

(Editing by Bob Burgdorfer)