Gold price tumbled $24.45, or 1.5%, to $1,582.77 per ounce

The gold price tumbled $24.45, or 1.5%, to $1,582.77 per ounce on Thursday in the aftermath of yesterday’s Fed meeting.  There, the Ben Bernanke-led central bank decided not to launch a third round of quantitative easing (QE3), which provided a headwind for the yellow metal and assets linked to the price of gold.  A stronger U.S. dollar also put pressure on the gold price this morning, as the greenback rose 0.6% against a composite of foreign currencies.

As for the gold price, Saxo Bank vice president Ole Hansen wrote in a note to clients that “Currently we’re seeing a bit of follow-through from disappointed investors, but believe we should be finding support pretty soon… Overall I think the market is not ready to let go of gold, as it still looks like one of the better bets should the economic outlook continue to deteriorate.”
Jan Hatzius, chief U.S. economist at Goldman Sachs, also noted that the FOMC statement was more dovish than at the prior meeting.  The Fed “put in place more clear easing bias in the statement,” Hatzius stated.

The Goldman economist went on to say that “The concluding sentence now says that the FOMC ‘is prepared to take further action’, whereas previously the statement said that the committee would ‘regularly review the size and composition of its securities holdings’. Fed officials also added that promoting a ‘sustained improvement in labor market conditions’ could be justification for easing (in addition to promoting ‘a stronger economic recovery’).”

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