Prices of gold and silver took a tumble in electronic trading Thursday, as gains in the wake of the Federal Reserve's expanded monetary stimulus gave way to profit-taking. After dropping more than $20 to a low of $1,695.50 an ounce at one point, February gold futures recovered slightly to $1,701, though still down $16.90, or 1% from Wednesday's settlement price. Spot gold prices were at $1,699, down $12.60, or 0.7%. Gold prices had risen $8.30 in a regular session on the Comex division of the New York Mercantile Exchange overnight after the Federal Reserve announced a new bond-buying program. The Fed also said it would keep interest rates at extremely low levels until the unemployment rate falls to 6.5%, unless inflation accelerates before then. James Steel, an analyst at HSBC Securities, said the research house had noticed a pickup in macro hedge-fund buying after the Fed announcement, but that was partially offset by sales from investors, such as pension funds, endowments and insurance companies. “We view the [Fed] announcement as bullish, but with market expectations already factored in for some easing, we don't expect prices to react robustly near-term," said Steel. “In the long run, the ongoing monetary expansion is supportive of gold, especially if it is a factor weighing on the U.S. dollar." The ICE dollar index , which measures the greenback's performance against a basket of six other major currencies, was at 79.859 from 79.858 late in North America Wednesday. In other news, a Reuters report cited a U.S. government study Wednesday that said applying a levy of 12.5% — the benchmark government share applied to other resources — on the mining of gold and other precious metals could help raise hundreds of millions of dollars in government revenue. U.S. taxpayers currently receive no royalties on metals pulled from federal land. Applying the royalties on gold mined last year from Goldstrike mine in Nevada — the largest gold mine in North America — could have raised the government $150 million in revenue, according to Reuters's calculations. Among other metals futures, the March silver contract , which had risen a sharp 2.3% overnight, tumbled 77 cents, or 2.3%, to $33.02 an ounce. March futures for palladium dropped 2% to $687.20 an ounce, and those for copper lost 0.8% to $3.69 a pound. January platinum futures fell 1.8% to $1,617.40 an ounce. Marketwatch
