Gold bounces around after Fed gives no clue on QE
The gold price jumped wildly in response to the latest statement from the US Federal Reserve before returning close to breakeven for the day.
By mid-afternoon gold was trading at $1,327, up $2 from its opening levels.
The yellow metal was recovering from initial reaction to the Fed monetary policy decision that sent the price tumbling towards the crucial $1,300 level before a big jump back to an intra-day high of $1,340.
Trader were finding it hard to make sense of the US Fed's decision on monetary policy which gave no indication of the future of the central bank's quantitative easing program.
Precious metals investors had been worried that Bernanke would announce that the Fed will start tapering off its $85 billion a month monetary stimulus, which should boost the US dollar.
The value of gold and the dollar usually moves in opposite directions.
The Fed has been reviewing QE and is eager to throttle back asset purchases at the first signs of a solid economic recovery in the US, and Wednesday brought little change to its outlook of a "modest" economic recovery.
In June, Fed chairman Ben Bernanke caused consternation in the gold and bond markets when he hinted that tapering of QE could happen before the end of this year.
The first QE program was announced by Bernanke in December 2008 when an ounce of gold cost $837.50.