Gold Prices Tumble After Fed Taper Decision (Update 1)

Updated from 10:56 a.m. ET with settlement prices and the Fed's taper decision

NEW YORK (TheStreet) -- Gold prices tumbled Wednesday after the Federal Reserve's latest policy statement signaled a decision to scale back monetary stimulus.

Gold for February delivery at the COMEX division of the New York Mercantile Exchange was falling $17.80 to $1,217.20 an ounce in electronic trading. The gold price traded as high as $1,244 and as low as $1,215.20 an ounce, while the spot price was off $14.62, or 1.2%.

The Fed decided to cut its open-ended monthly asset purchases to $75 billion from $85 billion. The so-called tapering included $5 billion less in mortgage-backed securities, and $5 billion less in longer-term Treasuries.

The Fed had been purchasing $85 billion in mortgage-backed securities and longer term Treasuries every month for a year in an unprecedented policy that won't end until the central bank says so. With weeks of better-than-expected U.S. economic data, economists and analysts squabbled whether it was enough to trigger a taper.

"Our view for several months is largely this has been priced in [the gold market]," said Will Rhind, managing director of investment at the World Gold Council, said in a phone interview from New York. "A majority of this move has already been priced in."

Silver prices for March delivery were sliding 34 cents to $19.72 an ounce, while the U.S. dollar index was jumping 0.61% to $80.53. A strengthening in the dollar also likely was pushing gold prices down as the yellow metal in dollar-denominated terms becomes more expensive for investors.

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