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June 20, 2012, 2:42 p.m. EDT

Gold ends lower after Fed’s ‘Twist’ decision

Broad-based pullback for metals as traders play off central bank

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By Claudia Assis and Chris Oliver, MarketWatch

SAN FRANCISCO (MarketWatch) — Gold futures settled lower Wednesday, failing to catch bids after the Federal Reserve kept interest rates the same and said it would continue its “Operation Twist” program through the end of the year.

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Gold for August delivery  declined $7.40, or 0.5%, to $1,615.80 an ounce on the Comex division of the New York Mercantile Exchange.

Gold had added to losses immediately after the Fed’s decision, then stabilized shortly afterward. Read more on U.S. central bank’s policy statement and ‘Operation Twist.’

Most of the expectations around the Fed’s decision had been already priced in, said Rohit Savant, analyst with CPM Group in New York.

“A lot of it has been reflected in the market,” he said.

Fed officials cut their growth and inflation forecasts and said the unemployment rate will remain above 8% through the end of the year.

“Operation Twist” gets its name from the Fed trying to effectively twist the yield curve, by selling short-term securities that it holds while buying longer-term securities.

Fed Chairman Ben Bernanke held a press conference Wednesday, defending quantitative easing and saying the Fed stands ready to take further action to propel the U.S. economy.

Easing measures are a positive for gold, which thrives in part on fears of inflation and currency debasement.

Gold had spent most of Wednesday’s session pre-Fed decision modestly lower. The metal lost $3.80, or 0.2%, on Tuesday, weakening after spending most of the session wavering between small gains and losses.

Most metals futures tracked gold lower, with silver the outlier. Silver for July delivery  ended 2 cents higher, or 0.1%, to $28.39 an ounce. The metal had spent most of the trading day in the red.

July copper was off 5 cents, or 1.3%, to end at $3.39 a pound.

Platinum for July delivery  declined $13.70, or 0.9%, to $1,466.80 an ounce. The September contract for sister metal palladium lost $9.90, or 1.6%, to $619.50 an ounce.

Claudia Assis is a San Francisco-based reporter for MarketWatch. Chris Oliver is MarketWatch's Asia bureau chief, based in Hong Kong.

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