Gold Falls Most in 2 Weeks on Stimulus Bets


"Fed's stimulus plan may fall below economists' estimates."

Gold fell the most in two weeks on bets that the Federal Reserve will announce a U.S. stimulus below estimates by economists, boosting the dollar and eroding the appeal of the metal as an alternative investment.

Before today, gold gained 8.7% since Sept. 1, while the dollar dropped 7% against a basket of major currencies amid speculation that policy makers will announce another round of so-called quantitative easing to bolster the economy. The metal reached a record $1,388.10 an ounce on Oct. 14.

"You've got nervous longs exiting this market, said Matthew Zeman, a metal trader at LaSalle Futures Group in Chicago. "If the Fed disappoints with a smaller amount of quantitative easing, you might start to see the dollar gain, and gold is going to go down.

Gold futures for December delivery dropped $25.20, or 1.9%, to $1,331.70 at 11:31am on the Comex in New York. A close at the price would mark the biggest decline for a most- active contract since Oct. 19. Earlier, the metal climbed as much as 0.6%.

The Fed has kept its benchmark interest rate at zero% to 0.25% since December 2008 and purchased $1.7 trillion in Treasuries and mortgage-backed assets to spur growth.

Estimates for the size of the Fed's next round of asset purchases range from $1 trillion at Bank of America-Merrill Lynch to $2 trillion at Goldman Sachs Group Inc. Economists at both firms agree the Fed may start by announcing a $500 billion plan.

Silver futures for December delivery dropped 74.1 cents, or 3%, to $24.095 an ounce.

Platinum futures for January delivery fell $17.10, or 1%, to $1,702 an ounce on the New York Mercantile Exchange.

Palladium futures for December delivery declined $8.80, or 1.4%, to $636.65 an ounce.

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