Gold: Looks like QE end wasn't baked into price after all

Declines in the gold price accelerated in afternoon trade after the US Federal Reserve announced the end of its economic stimulus program and struck an upbeat tone on the state of the US economy.

In afternoon trade on the Comex division of the New York Mercantile Exchange gold for December delivery was changing hands for $1,208.30 an ounce, down more than $20 or 1.7% from Tuesday's close.

The Federal Reserve on Wednesday voted 9 to 1 to end the third round of its quantitative easing program known as QE3 which together with similar measures in Japan and Europe pumped trillions of easy money into financial markets since the global financial crisis.

QE3 peaked at monthly asset purchases of $85 billion and since December 2008 when then Chairman Ben Bernanke first announced the stimulus, the Fed's balance sheet has ballooned to $4.5 trillion, a nearly six-fold increase.

The US central bank on Wednesday also signaled a much more hawkish stance towards interest rates explicitly stating that rates could be hiked earlier than "currently anticipated" should the labour market improve at a faster rate and the bank's inflation objectives be met sooner. The Fed hasn't raised rates, which have been hovering near zero since QE1, since 2006.

Despite a horrendous 2013, the metal's worst price performance in over three decades, and the fizzling out of this year's rally an ounce of gold is still worth over 40% more than before QE1 when the ruling price was $837 an ounce.