Draghi drags gold under $1,600

Gold dropped to below $1,600 an ounce for the first time in a week on Thursday after disappointment over efforts to stimulate the economy from the US Federal Reserve was followed by more of the same from the from the European Central Bank.

By mid-afternoon traders had sent spot gold tumbling 1% or just over $16 an ounce to trade at $1,588. Gold has now pulled back more than 10% from 2012 highs of $1,789 reached in late February.

Gold bulls were hoping for a shot in the arm from Ben Bernanke, chairman of the US Fed, in the form of a third round of quantitative easing and similar measures from the European Central Bank.

What they got on Wednesday were vague words from Bernanke about keeping a close eye on the state of the American economy and from ECB president Bruno Draghi on Thursday a complete lack of concrete measures on ending the debt crisis on the continent. The UK offered no monetary easing either this week while expectations that China would relax banking regulations further were also dashed.

Gold bulls believe QE3 and similar stimulus programs in the crisis-ridden Eurozone and fast-slowing China will restore the yellow metal's status as an inflation hedge and wealth preserver.

Flooding markets with cheap money would also hurt the dollar, further boosting the metal's price.

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