Gold drops after two-day rally
NEW YORK (AP) - Gold and silver prices fell on Friday as investors continued to digest the Federal Reserve's decision to keep its economic stimulus intact.
The December contract for gold fell $36.80, or 3 percent, to $1,332.50 an ounce Friday. December silver dropped $1.37, or 6 percent, to $21.93 an ounce.
The decline follows a stunning rally for gold and silver in the last two days, when the two metals had their biggest gains since the financial crisis. Investors made heavy bets that the Fed's continued stimulus might cause inflation or hurt the dollar. Gold serves as a hedge against those trends.
Commodities analysts at Barclays Capital said that gold and silver's move earlier this week was a "knee-jerk reaction" to the Fed.
"We expect the impact to be short-lived," wrote Barclays' precious metals analyst Kevin Norrish.
Norrish said the Fed's decision might have lift gold in the medium term, but the impact would be minor.
Other metals prices also fell.
December copper was down 3 cents to $3.32 a pound. October platinum fell $40.40 to $1,432.60 an ounce and December palladium was down $16.25 to $721.95 an ounce.
Energy prices fell.
Benchmark oil dropped $1.72, or 2 percent, to close at $104.67 a barrel on the New York Mercantile Exchange.
Wholesale gasoline fell a penny to $2.68 per gallon, natural gas was down 3 cents to $3.68 per 1,000 cubic feet and heating oil was unchanged at $3.00 per gallon.
Crop futures were mostly lower as well.
December wheat was unchanged at $6.46 a bushel. December corn was down less than a penny to $4.505 a bushel and November soybeans rose 1 cent to $13.15 a bushel.
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