VINACHEM

Gold fell the most in three monthsafter the Federal Reserve further reduced U.S. monetary stimulusand more officials predicted a rise in interest rates in 2015,curbing demand for the metal as a store of value.

The Fed reduced the monthly pace of bond purchases by $10billion to $55 billion, and 13 of the 16 Federal Open MarketCommittee participants expect an increase in the main interest rate next year. Spot gold has lost 3.9 percent this week onsigns the American economy is pulling out of a slowdown thatpolicy makers linked in part to harsh winter weather.

“The real surprise is that the Fed officials see ratesrising next year, and that is very negative for gold,” CharlieBilello, director of research who helps oversee $220 million ofassets at New York-based Pension Partners LLC, said in atelephone interview. “Also, the Fed talking about the economyshowing strength makes this statement less dovish than widelyanticipated.”

Gold for immediate delivery slumped 1.9 percent to$1,329.80 an ounce at 3:27 p.m. in New York, heading for thebiggest drop since Dec. 19.

Futures for April delivery settled 1.3 percent lower at$1,341.30 on the Comex in New York. The metal fell for the thirdstraight day, the longest slump in 10 weeks. The metal rose to asix-month high of $1,392.60 on March 17 amid escalating tensionbetween Russia and Ukraine.

This year, gold has advanced 12 percent as signs of slowingglobal growth and turmoil in Eastern Europe increased demand forhaven assets. Russian President Vladimir Putin said his countryisn’t seeking to split Ukraine further. The U.S. and Europepledged more sanctions for his drive to annex Crimea.

Fed Tapering

Last year, gold fell 28 percent, the most since 1981, amida rally in equities and on concern that the Federal Reserve willslow the pace of monetary stimulus. The price jumped 70 percentfrom December 2008 to June 2011 as the Fed pumped more than $2trillion into the financial system and cut interest rates to arecord to boost the economy.

Weather played an important role in weakening economicactivity in the first quarter, Fed Chair Janet Yellen said todayafter the FOMC’s two-day meeting.

“There is sufficient underlying strength in the broadereconomy to support ongoing improvement in labor-marketconditions,” the FOMC said in a statement.

The central bank also cut monthly bond buying by $10billion at the prior two meetings.

Goldman Sachs Group’s Jeffrey Currie said this month thechances are increasing that prices will slump to $1,000 for thefirst time since 2009.

“Gold will remain under pressure as it’s clear thattapering with continue,” Mike Meyer, assistant vice presidentat EverBank Wealth Management in St. Louis, said in a telephoneinterview. “The temporary safe-haven premium because of Russiais slowly disappearing.”