Fed does nothing to help gold's terrible Q4

The price of December gold fell by $10 an ounce to briefly trade under the $1,700 level on Wednesday, worsening a 5% or $95 slide over just the last three weeks.

Gold closed out the September quarter with its biggest quarterly gain since 2010 boosted by the announcement of an open-ended third round of quantitative easing in the US. QE increases gold's allure as a hedge against inflation amid a weakening dollar.

But despite all the cheap money flooding the market at a rate of $85 billion a month, after the metal again failed to breach the psychologically important $1,800 level sellers stepped in.

Minutes released on Tuesday by the Federal Open Market Committee did little to encourage gold bulls – there was no hint of an expansion of QE3 to cover $45 billion a month of purchases under the Twist program which expires at the end of the year.

QE and Twist both aim to keep interest rates low – something the Fed has vowed to do until at least mid-2015. The Fed also said in Tuesday's statement that it has seen a pick-up in inflation, but that its long-term inflation expectations remain stable.

By mid-afternoon gold was changing hands for $1,704, down $5 on the day. Traders are now worrying that without a clear catalyst to push prices higher, gold will continue to drift lower in the coming weeks.