Updated from 11:28 a.m. EDT

Gold softened Wednesday afternoon on confirmation the

Federal Reserve

will hold off from further monetary tightening.

In a release, published at 2:15 p.m. EDT, the Fed noted that inflationary pressures are likely to moderate over time and, as expected, left its target federal funds rate unchanged at 5.25%.

Gold's floor session was over on the Comex by the time the news hit the tape, but in after-hours trading contracts for December delivery of bullion were drifting lower by $1.10 cents at $585.10 an ounce. Earlier in the day a weaker dollar helped boost gold $3 to $586.20 an ounce by the close.

A weaker U.S. currency helped the pre-Fed rally, with the dollar buying 117.37 yen down from 117.61 yen late Tuesday. It was losing against the euro, which was trading at $1.2693 compared to $1.2679 previously. Bullion prices tend to move inversely with changes in the price of the greenback.

Not everyone is as convinced that the war on inflation is over, however.

"While excess liquidity may have diminished to some degree, it has not disappeared altogether," says Michael Darda, chief economist at MKM Partners. "We expect cost and price pressures to continue pushing core inflation higher during the quarters ahead."

Contrary to what many others believe Darda, expects a rate hike by the Fed rather than a cut.

The bullion exchange-traded funds,

iShares Comex Gold Trust

(IAU) - Get Report

and

streetTRACKS Gold Shares

(GLD) - Get Report

, were moving up vs. Tuesday's close, but off the session highs, in line with the metal.

Among the miners, CIBC World Markets cut its rating on

Iamgold

(IAG) - Get Report

to sector underperform from sector perform and trimmed its price target to $11 a share from $13. The stock was down just a fraction, however, aided by the rising price of the metal.

Among those gaining in the mining sector were

Eldorado Gold

(EGO) - Get Report

, up about 2.7%; and

Goldcorp

(GG)

, rallying 2.1%.

In base metals, Comex December copper futures rebounded from early losses to close barely changed at $3.3725 a pound, up one twentieth of a cent.

"The weaker tone in commodities, fed by exiting fund money, is being encouraged by the prospect of slowing economic growth, particularly in the U.S.," notes Edward Meir, an analyst with commodity brokers Man Financial, in a daily research brief.

Global copper consumption increased 2.8% during the first seven months of the year compared to the same period a year ago, according to new figures from the World Bureau of Metals Statistics, published before the opening bell.

The U.K.-based research house also states that production of refined copper was up 6% vs. the 2005 period. Notable among the numbers was falling demand from China, off 7.8%.

Miners

Phelps Dodge

( PD) and

Southern Copper

( PCU) were slipping recently.

Elsewhere in base metals, Canada's

Inco

(N)

said it expects to smash third-quarter forecasts, with record nickel prices likely to more than triple profits vs. year-ago figures.

The company anticipates earnings in the $2.66 to $2.75 a share range. By mid-afternoon shares were up a whisker after having spent most of the session hovering close to Tuesday's close.

BMO Capital Markets upped its rating on diversified miner

Rio Tinto

( RTP) to outperform from market perform. The stock was rallying 1.7% recently.

In the steel market,

Arcelor Mittal

(MT) - Get Report

reports that a blast at its Lenina mine in Kazakhstan killed 18 people, and 25 remain missing.

The cause of the explosion remains unknown and the company's shares were recently up 0.4% despite the tragedy.