Gold declines as US stimulus outlook curbs demand

LONDON: Gold today declined, following its biggest jump in more than 10 months, as speculation the US Federal Reserve may taper its bond-buying plan curbed demand for the metal as a protection of wealth.

Gold fell 1.30 per cent to 1,376 dollar an ounce and silver by 2.62 per cent to 22.32 dollar an ounce. It slid to 20.33 dollar yesterday, the lowest since September 2010.

Fed Chairman Ben S. Bernanke will discuss the economic outlook in congressional testimony and the central bank will publish minutes of its latest meeting tomorrow.

Fed Bank of Chicago President Charles Evans said the economy has improved "quite a lot".

Gold rose 2.5 percent yesterday, the most since June 29, after Moody's Investors Service said US policy makers must address debt woes to avoid a credit-rating cut this year.

Holdings in exchange-traded products dropped 10.9 metric tons to 2,187.4 tons, the lowest since July 2011, and are down 17 per cent this year.

Gold tumbled 17 per cent this year, slipping into a bear market last month, on expectations the Fed may scale back stimulus that helped the metal cap a 12-year bull run in 2012.