Gold prices dropped to the lowest level since July on Thursday, after the Federal Reserve announced that it would begin to taper its bond-buying program to USD75 billion a month in January.
On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD1,214.60 a troy ounce during European morning trade, down 1.65%. Comex gold prices fell to a session low of USD1,208.70 a troy ounce earlier, the weakest level since July 5.
Gold futures were likely to find support at USD1,196.65 a troy ounce, the low from June 27 and resistance at USD1,244.00, the high from December 18.
The February contract settled 0.4% higher in volatile trade on Wednesday to end at USD1,235.00 a troy ounce.
The Fed announced Wednesday that it would reduce its USD85 billion-a-month bond buying program by USD10 billion in January. In his last press conference as Fed Chairman Ben Bernanke said the economy was continuing to make progress.
The U.S. central bank reiterated that interest rates are likely to remain low even after the unemployment rate drops below 6.5%, the threshold at which the Fed has previously said it would start to consider rate increases.
The move comes after months of uncertainty surrounding the future of the Fed''s asset-purchase program. When market players started to anticipate the possibility of a reduction in stimulus early in the summer, it resulted in a sharp selloff in gold prices.
Gold is down approximately 28% this year, on track for its first annual loss in 14 years, as solid U.S. economic data underlined expectations the Fed will begin curbing stimulus.
Elsewhere on the Comex, silver for March delivery plunged 2.9% to trade at USD19.47 a troy ounce, while copper futures for March delivery inched down 0.35% to trade at USD3.308 a pound.
Jerusalem Post Annual Conference. Buy it now, Special offer. Come meet Israel's top leaders