Gold falls after U.S. Fed dampens hopes for more stimulus

By Sumita Layek

(Reuters) - Gold prices fell on Thursday to the lowest in more than a week, after the U.S. Federal Reserve dashed investors' hopes for more stimulus to support the coronvirus-hit economy.

Spot gold dropped 0.8% to $1,943.72 per ounce by 10:58 a.m. EDT (1458 GMT), after falling to its lowest level since Sept. 9 at $1,932.36. U.S. gold futures slipped 0.9% to $1,952.50.

"Despite the fact that the Fed was quite dovish, it would seem that for the gold market it wasn't dovish enough," said Bart Melek, head of commodity strategies at TD Securities.

"There is concern that with no more Quantitative Easing, there might be less momentum for gold."

The Fed pledged to keep rates pinned near zero levels until inflation was on track to "moderately exceed" its 2% inflation target "for some time".

Bullion has gained 28% so far this year, helped by near-zero interest rates globally and demand for a hedge against perceived inflation.

However, the U.S. central bank also stated that it expected a faster economic recovery than previously forecast, with unemployment falling more quickly than it had expected in June.

"Many were hoping for more clarity on how the Fed plans to stoke inflation in the coming months," Kitco Metals senior analyst Jim Wyckoff said in a note.

Wyckoff added that even though we're seeing selling pressure in gold and silver, "such situations have also invited metals bulls to step in and buy the dips to keep the overall price uptrends alive in gold and silver.

Meanwhile, U.S. new jobless claims remained perched at higher levels last week suggesting stalling labor market recovery.

Elsewhere, silver declined 1.4% to $26.85 per ounce, platinum dipped 3.5% to $934.70 per ounce, and palladium fell 3% to $2,327.51.

(Reporting by Sumita Layek in Bengaluru; Editing by David Gregorio)