NEW YORK—Gold and silver futures sank, joining a selloff in stocks and commodities after minutes from the Federal Reserve's latest policy meeting undercut expectations for further monetary stimulus.
Gold for June delivery slumped $52, or 3.1%, to $1,620 an ounce in Wednesday morning trade on the Comex division of the New York Mercantile Exchange. Silver futures also posted sharp losses, with the May contract falling $1.69, or 5%, to $31.57 an ounce.
"What we see today is a rather broad-based selloff in financial markets," said Carsten Fritsch, an analyst at Commerzbank. "The trigger was yesterday's Fed minutes which dashed hopes of (a third round of quantitative easing.)"
Minutes from the Federal Reserve Tuesday signaled that central-bank officials were less interested in another round of large-scale purchase of bonds.
Gold's reaction was "was swift and brutal" on Tuesday, said INTL FCStone's Edward Meir, and the slide is continuing.
The losses for precious metals also came as European stocks slumped and U.S. equities opened sharply lower. The Dow Jones Industrial Average dropped 100 points in early trade.
Gold is typically seen as a safe-haven investment, but lately it has acted as a more traditional commodity.
This behavior "suggests gold is still mainly driven by speculative elements, not by long-term investors," said Commerzbank's Mr. Fritsch.
In the currency markets, the U.S. dollar rallied against its major rivals, putting pressure on dollar-denominated commodities such as gold by making them more expensive for holders of other currencies.
The dollar index, which tracks the U.S. unit against a basket of six other currencies, rose to 79.882, from 79.410 in North American trade late Tuesday.
"The impact of a higher U.S. dollar on the gold price will be particularly pronounced given that a large majority of gold is invested in the U.S.," strategists at the National Australia Bank said. "In the medium-to-longer term, we expect more certainty surrounding the European sovereign debt situation to emerge, while a relatively stronger U.S. dollar and a return to fundamentals should also help to lower prices," the strategists added.
The National Australia Bank forecast gold to trade at around $1,620 an ounce over the June quarter.
The broader metals complex tracked gold and silver futures lower.
May copper dropped 9 cents, or 2.3%, to $3.83 a pound.
Palladium for June delivery fell $14.65, or 2.2%, to $644.95 an ounce, while platinum for July delivery dropped $47.40, or nearly 3%, to $1,613.10 an ounce.
