Gold price gives up all its gains on profit-taking

The gold price dropped more than 1% on Thursday, erasing yesterday's gains made on the back of a renewed pledge by the Federal Reserve to continue its quantitative easing program.

In lunchtime trade April gold futures exchanged hands for $1,660 an ounce, down more $20 as traders made the most of yesterday's show of strength from the yellow metal to book some profits.

Gold is also down for the month, making January the fourth consecutive month of losses for the precious metal.

The yellow metal was boosted on Wednesday when the Fed assured markets that it will continue its open-ended QE  program – buying up Treasurys and mortgage bonds to the tune of $85 billion a month – because it continues to see "downside risk to the economic outlook".

The Fed's balance sheet crossed the $3 trillion mark early into 2013 and is set to top $4 trillion by the end of the year.

QE, which floods markets with cheap money, increases gold's allure as a hedge against inflation amid currency depreciation.

Gold has doubled in value since the first QE program was announced by chairman Ben Bernanke in December 2008.