--Gold slides lower as disappointment over lack of QE continues
--India, China remain on sidelines
By Tatyana Shumsky
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Gold prices extended their losses as the precious metal got caught in a broad market selloff triggered by a surprising uptick in U.S. crude inventories.
Crude oil stockpiles rose 9 million barrels to 362.4 million, well exceeding forecasts of a 1.9 million barrel increase.
Oil futures, which were already lower ahead of the release, slumped 2.6% to $101.32 a barrel.
The selloff spread to equity markets, with the Standard & Poor's 500 recently down 1.2% at 1396.4.
Gold futures extended their losses as investors rushed for the exit. The most actively traded gold contract, for June delivery, was recently down $55.60, or 3.3%, at $1,616.40 a troy ounce on the Comex division of the New York Mercantile Exchange.
"People are sitting on their hands, waiting to see how low this market can go before [it finds] support and that's leading to momentum selling," said Dave Meger, director of metals trading with Vision Financial Markets.
Earlier in the day, gold futures were under pressure amid ongoing disappointment over the Federal Reserve's apathy toward further stimulus. The Federal Open Market Committee did not hint at an imminent round of quantitative easing in its meeting minutes, released Tuesday afternoon.
"The impact of the Fed minutes on gold, which was already trading lower heading into the news, was swift and brutal," said Edward Meir, senior commodity analyst with INTL FCStone, in a note.
Gold prices slumped on the release Tuesday and continued to erode overnight, with the yellow metal trading down 3% by early Wednesday.
Gold has benefited from previous monetary stimulus measures, which sparked worries about inflation and weakness in the dollar. At the time, investors flocked to gold, which is widely considered a hedge against inflation, a store of value and an alternative to paper currencies.
But with no such easy money boost on the radar from the Fed, traders who had bet on further stimulus pared their gold holdings.
Gold's downward spiral was exacerbated by national holiday celebrations in China, which kept buyers there out of the market. China is the world's second-largest consumer of gold, but market participants there have been on the sidelines since Monday. Chinese traders are due to return to the precious metal market Thursday.
Meanwhile, jewelry store owners in certain states in India are also on the sidelines as they continue to protest the government's gold tax increases. India's gold imports fell by around two-thirds in March as a result of the protests.
A stronger dollar also weighed on gold prices. The greenback rallied against the euro, with the common currency recently changing hands at $1.3127, down from $1.3233.
Gold futures are priced in dollars and seem more expensive to investors using foreign currencies when the dollar weakens.
Silver prices followed gold's cues, with futures for May delivery tumbling $1.935, or 5.8%, to $31.330 a troy ounce.
Silver tends to be more volatile than gold, as it is a less liquid market in which each individual trade has a greater impact on price discovery.
-By Tatyana Shumsky, Dow Jones Newswires; 212-416-3095; tatyana.shumsky@dowjones.com
