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Gold falls below $1,324; Fed prompts traders to book profits

AP

Gold prices settled nearly 2 percent lower on Thursday, pressured as commodity funds sold to square books at the end of October, and as investors kept selling after the Federal Reserve's latest policy outlook offered few surprises.

A sharp rise in the dollar index also pressured commodities after data showed business activity in the U.S. Midwest surged past expectations in October, countering recent evidence of soft economic growth.

Comex gold options floor trader Jonathan Jossen said many commodity funds close out core positions and make funds available for year-end taxes on Oct 31, the last day of the fiscal year for such funds.

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"It's a very benign equity move today, and here gold is down sharply,'' Jossen said. The S&P 500 equities index was little changed on Thursday.

Spot gold was last down 1.3 percent to $1,324 an ounce. During the session, gold hit a one-week low at $1,318.79.

For the month, gold was down just 0.2 percent, with the decline limited by economic uncertainty over a partial U.S. government shutdown and a crisis to raise the debt ceiling.

U.S. gold futures for December delivery settled 1.9 percent lower at $1,323.70 an ounce.

On Wednesday, gold fell after the Fed did not sound quite as alarmed about the economy after its last policy meeting as some had anticipated. The U.S. central bank kept its $85 billion-a-month stimulus plan intact.

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—By Reuters

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