SINGAPORE: Gold slipped for a third straight day on Thursday after the US Federal Reserve stopped short of launching another round of quantitative easing to stimulate the economy, a move that would have boosted bullion's appeal by fuelling inflation prospects.
But lower prices attracted purchases from jewellers in Asia, while a fragile US economy and the debt crisis in Europe may eventually prompt the Fed to adopt more aggressive measures to help the economy.
A Reuters poll showed Wall Street's top bond firms still see a 50 percent chance of a third bout of quantitative easing or "QE3", in which the Fed effectively creates money to fund large asset purchases, to stimulate the economy.
Cash gold fell $4.48 an ounce to $1,600.90 by 0608 GMT. Gold rallied to its 2012 highest level of around $1,790 in February after the Fed at the time said it would keep interest rates near zero until the end of 2014 at the earliest.
"The fact is that the Federal Reserve's attitude hasn't really changed at all," said Yuichi Ikemizu, head of commodity trading, Japan, at Standard Bank.
"I mean if you read Bernanke's speech, he's still very worried about unemployment. I am still bullish," said Ikemizu, who expects gold to hold around $1,580 to $1,590 on the downside.
Fed Chairman Ben Bernanke, speaking at a news conference after a two-day policy meeting, said the central bank was concerned Europe's prolonged debt crisis was dampening US economic activity and employment.
The Fed expanded its bond-buying scheme dubbed "Operation Twist" by $267 billion to keep long-term borrowing costs down. The programme, which was due to expire this month, will now run through the end of the year.
US gold for August delivery fell more than 1 percent to a low of $1,598.10 an ounce before recovering slightly to $1,601.80 an ounce, still down $14.00.
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