NEW YORK - Gold fell on Tuesday as uncertainty over what the U.S. Federal Reserve will do to stimulate growth prompted investors to take profits, even as a Fed statement showed the struggling economy might need help soon.
The metal was pressured on Tuesday as top Fed officials downplayed the need for the U.S. central bank to resume buying government debt again to boost the economy, a maneuver known as quantitative easing.
Gold was little changed after the Fed revealed minutes of its last policy-setting session in September, in which officials believed the struggling recovery might soon need more help.
"It is positive longer term because it reaffirms that the Fed is moving closer to QE, and it's positive for gold," said James Steel, chief commodity analyst at HSBC, of the Fed minutes.
"We are not sure about the timing and the extent of the Fed's action, and that has caused the market to pull back," he said.
Spot gold XAU= was trading down 0.3 percent at $1,349.30 an ounce at 3:00 p.m. EDT (1900 GMT). U.S. gold futures for December delivery GCZ0 settled down $7.70 an ounce at $1,346.70.
Bullion has not set an all-time high in three sessions after an 11-session run in which it hit nine record highs.
Investors took profits on Tuesday after gold rallied to a record $1,364.60 an ounce last week as expectations the Federal Reserve would move toward further quantitative easing to bolster the flagging U.S. economy undermined the dollar.
On Tuesday, Kansas City Federal Reserve President Thomas Hoenig, who all year has steadfastly opposed the Fed's super-easy monetary policy, fleshed out his stance against further easing, saying it would do little to aid the recovery and could spark inflation.
On Friday, St. Louis Fed President James Bullard said the Fed faced a difficult decision at next month's policy meeting on whether to offer further economic stimulus.
"Gold is cooling off a little bit based on ... the fact that there has been noise from Fed officials that we should not assume that there is going to be massive additional quantitative easing," said Donald Selkin, chief market strategist of National Securities Corp.
To help shift inflation expectations, policy makers debated providing more detailed information about what rates of inflation they would prefer, or the possibility of making clear they would tolerate a higher level of inflation on a temporary basis, a policy approach known as price-level targeting, minutes of the Fed's last meeting showed.
The dollar fell on the Fed statement after initially rising against the euro and a basket of major currencies as investors worried the U.S. currency had fallen too abruptly. (FRX/) Analysts said the currency market has already priced in aggressive U.S. monetary easing and that the dollar is likely to rebound if the Fed does not press ahead with such a policy at its Nov. 21 meeting.
"Given that the U.S. dollar has declined 10 percent against the euro since the September lows, one has to wonder how much quantitative easing may already be priced in," CMC Markets analyst Michael Hewson said in a note."