Gold futures on the COMEX division of the New York Mercantile Exchange shot down Wednesday as traders reacted to the confirmation by the Federal Reserve Bank that the economy was getting better and further qantitative easing measures were unlikely.
The most active gold contract for April delivery plummeted 51.3 dollars, or 3 percent, to settle at 1,642.9 dollars per ounce.
Tuesday afternoon's statement from the Fed, which came 15 minutes after the gold market closed for that day, confirmed traders'earlier suspicions regarding lack of upcoming quantitative easing policies.
In Tuesday's release, the Fed noted recent positive signs in the U.S. economy and job market, while downplaying immediate concerns for inflation. While the Fed said they would continue to keep interest rates low, there was no mention of another round of quantitative easing.
Seen as a safe haven in times of economic difficulties, gold dropped in response to the Fed statement of an improved economy, closing at the metal's lowest per ounce value since Jan. 13.
Gold also saw pressure from a stronger dollar after the Fed statement, while the dollar rising against the yen in particular to close at one dollar for 83.81 yen, its highest level since last April.
Silver, like gold, dropped significantly in trading Wednesday. Silver for May delivery dropped 1.4 U.S. dollars, or 4.17 percent, to settle at 32.18 dollars per ounce. Platinum for April delivery fell 26.5 dollars, or 1.56 percent, to close at 1,675.3 dollars per ounce. Despite the decline, platinum still retained a higher value than gold, reversing the trend seen since mid-2011 when gold traded at a higher value than platinum.