PRECIOUS-Gold down 1.2 pct as Fed minutes show doubts on QE

* Fed concerns trigger sell-off
* Some Fed policymakers suggest early end to stimulus

By Frank Tang
NEW YORK, Jan 3 (Reuters) - Gold prices fell more than 1
percent Thursday on signs that Federal Reserve officials are
increasingly concerned about the risks of the Fed's asset
purchases on financial markets, reducing bullion's appeal as a
hedge against inflation.
Minutes from the Fed's December policy meeting showed a
growing reticence about further increases in the central bank's
balance sheet, which was expanded sharply in response to the
financial crisis and recession of 2007-2009.
The minutes also showed several officials thought it would
be appropriate to slow or stop asset purchases well before the
end of 2013, citing concerns about financial stability and the
size of the balance sheet.
"With the news that some policymakers suggested that the Fed
could withdraw QE before the end of year, that put a dent on one
of the underpinnings on gold, which is expansionary monetary
policy," said Mark Luschini, chief investment strategist of
Janney Montgomery Scott, a broker-dealer which manages $54
billion in assets.
Economic fears due to unprecedented Fed monetary stimulus,
including printing money to buy assets - known as quantitative
easing - has been a key driver in boosting gold, a traditional
inflation hedge.
Spot gold was down 1.2 percent at $1,665.60 by 2:45
p.m. EST (1945 GMT).
U.S. COMEX gold futures for February delivery were
down $14.20 an ounce at $1,674.60, with volume in line with its
30-day average, preliminary Reuters data showed.
On Dec. 31 gold closed up 7 percent from a year earlier, its
12th consecutive yearly gain.
Among other precious metals, silver was down 1.8
percent to $30.40 an ounce on Thursday, platinum edged up
0.2 percent to $1,564.24, and palladium dropped 1.9
percent to $689.25 an ounce.
2:45 PM EST LAST/ NET PCT LOW HIGH CURRENT
SETTLE CHNG CHNG VOL
US Gold FEB 1674.60 -14.20 -0.8 1661.90 1690.50 122,491
US Silver MAR 30.72 -0.287 -0.9 30.360 31.225 32,029
US Plat JAN 1576.70 11.60 0.7 1563.90 1576.70 132
US Pall MAR 697.15 -10.80 -1.5 691.00 708.00 3,013

Gold 1665.60 -20.75 -1.2 1662.28 1689.60
Silver 30.400 -0.570 -1.8 30.350 31.180
Platinum 1564.24 3.74 0.2 1564.00 1575.74
Palladium 689.25 -13.12 -1.9 693.77 709.00

TOTAL MARKET VOLUME 30-D ATM VOLATILITY
CURRENT 30D AVG 250D AVG CURRENT CHG
US Gold 151,388 159,451 174,269 13.06 -0.43
US Silver 38,876 50,553 52,943 22.57 -1.48
US Platinum 9,109 13,674 10,454 17.82 -3.08
US Palladium 3,085 5,348 4,789