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

Thu Jan 3, 2013 3:13pm EST

* 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
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