Gold tanks after Fed backs away from QE3

Contract gold dropped almost $40 an ounce in a matter of minutes in lunchtime trade on the Comex division of the New York Mercantile Exchange on Tuesday.

Gold for delivery in June was last trading at $1,643.90 an ounce from morning highs of $1,683 an ounce.

The dramatic fall came after comments from the US Federal Reserve that seemed to preclude any chance of another round of monetary easing or so-called QE3 and that its policy of zero interest rates may be coming to an end sooner than previously thought.

The Fed's March minutes revealed according to MarketWatch that at the meeting, "only a couple of members suggested that more easing could become necessary if the economy lost momentum," and there was "apparently no discussion at the meeting of any new form of quantitative easing."

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