Gold tumbled the most in 11 weeks as the Federal Reserve refrained from taking more stimulus measures and as a stronger dollar curbed demand for alternative assets. Silver plunged more than 7 percent.
The dollar rose to an 11-month high against the euro as Italian borrowing costs increased at a debt auction. The Standard & Poor’s GSCI index of 24 commodities dropped as much as 2.7 percent. The Federal Reserve yesterday said the U.S. economy is maintaining its expansion and refrained from taking new action to bolster the economy.
“There is turbulence across the commodity market because of the strength in dollar,” Jochen Hitzfeld, an analyst at UniCredit SpA in Munich, said in a telephone interview. “No further stimulus from the Fed is bearish for the market.”
Gold futures for February delivery dropped 3.2 percent to $1,609.50 an ounce at 10:31 a.m. on the Comex in New York, heading for the biggest slide since Sept. 23. Earlier, prices slumped to $1,602.40, the lowest since Oct. 5.
Gold fell after the Fed “statement failed to hint at further quantitative easing despite acknowledging slowing global growth,” Suki Cooper, an analyst at Barclays Capital in New York, wrote in a report.
Dennis Gartman, an economist who predicted the slump in commodities in 2008, yesterday said the metal may decline to $1,475, extending a drop from the record $1,923.70 set in September to more than 20 percent, the common definition of a bear market.
Silver futures for March delivery dropped 6.6 percent to $29.20 an ounce. Earlier, prices tumbled as much as 7.7 percent to $28.855, the lowest since Oct. 5.
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