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Gold ends about 1% higher; Fed tapers another $10B

AP

Spot gold remained higher after the Federal Reserve said it would reduce its monthly stimulus program by another $10 billion.

Fed Chairman Ben Bernanke, who hands the central bank's reins to Vice Chair Janet Yellen on Friday, also adjourned his last policy-setting meeting without making any changes to the U.S. central bank's other main policy plank: its longer-term plan to keep interest rates low for some time to come.

Spot gold was last up 0.4 percent to $1,262 an ounce, off an early low of $1,249.04. U.S. gold futures for February delivery settled 0.9 percent higher at $1,255.90 an ounce.

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"Bullion historically performs well during periods of ultra-loose monetary policies and the prospect for monetary policy tightening may keep a lid on gold in near-term,'' said James Steel, HSBC chief precious metals analyst.

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Although a steady scaling back of the program is now largely priced into the market, any sign that it is moving more quickly or slowly than expected could still affect gold prices.

Demand for 'new' jewelry in India—until recently the world's largest bullion buyer—was fairly light as most consumers make use of old gold jewelry recycled into new pieces for the wedding season, dealers said. Premiums stayed steady at $80 an ounce over London prices.

Chinese buying has slowed this week as traders and consumers wrap up for the Lunar New Year holiday, which starts on Jan. 31. Chinese markets will be closed until Feb. 6.

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—By Reuters

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