Gold prices stared a brief but heart-stopping fall this morning, diving below the frightening $1,200 per ounce mark, on the aftermath of the US Federal Reserve’s decision to start tapering asset purchases under its economic stimulus program.
February deliveries were down 2.4% to $1,205.20 an ounce by 7:59 a.m. ET after plunging as much as 3% to $1,198 an ounce, the lowest price in almost six months.
This way the precious metal is heading for the first annual plunge in 13 years, as investors lost faith in the metal. Prices dove 37% since reaching a record-high of $1,923.70 an ounce in September 2011.
The Fed has been reviewing QE for several months and was eager to start winding down the program on signs of a stronger recovery in the US. Most economists, however, expected that the money printing presses would only be slowed down in March next year, when incoming chair Janet Yellen, a strong supporter of QE, has had time to make her mark.