Gold falls on speculation demand to wane with Fed set to meet

LONDON: Gold extended a drop from the highest price in more than two months on speculation the Federal Reserve will trim stimulus and physical demand in Asia slow before the Lunar New Year.

Gold fell by 0.2 per cent to USD 1,255.10 an ounce. It touched USD 1,279.61 yesterday, the highest since November 18, while silver added 0.2 per cent to USD 19.73 an ounce, halting two days of fall.

US Fed policy makers, who start a two-day meeting today, may continue paring the bank's bond-buying program after deciding in December to start reductions.

The Fed will reduce asset purchases by USD 10 billion at each meeting to end the program this year, according to the median of forecasts by economists in a Bloomberg survey. China's Lunar New Year holidays start January 31.