Gold, copper and European stocks collapse on Fed stimulus fears

Gold, copper and European stocks collapse on Fed stimulus fears

Growing concerns over the US Federal Reserve cutting back its stimulus program as soon as next month, triggered Wednesday a selloff in world shares and drove precious metals down.

Gold fell to a three-week low this morning. It was down 0.1% at nearly $1,280 an ounce, having hit its lowest level since July 17 at $1,272.64 earlier in the session.

Since the historic highs of 2011, gold has dropped more than 30%. In 2013 alone, the metal has lost nearly 25% of its value, the worst fall since modern trading began in early 1970s.

The US Commodity Futures Trading Commission latest data on positioning shows investors cut their long positions in gold last week. And, at the same time, outflows from gold exchange traded funds began to accelerate once again.

Industrial metals fell on a mix of worry about decreasing Chinese demand, an easing of supply concerns, and the Fed signals. Copper, the most important of the bunch, lost 1.2%, falling to $6,914 a tonne.

Meanwhile European share markets, like those in Asia earlier were dropping, a situation that was worsened by the Bank of England saying its Monetary Policy Committee stands ready to undertake further asset purchases while the unemployment rate remains above 7%.

The new Bank of England Governor, Mark Carney, decided to keep interest rates at historic lows of 0.5%.

The Fed, which last week voted to continue the central bank's $85 billion-a-month bond-buying program, next gather to discuss policy on Sept. 17 and 18.

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