NEW YORK—Gold futures retreated as investors worried that the Federal Reserve may cut short the easy-money policies that helped drive prices of the precious metal to record highs in recent years.
The most actively traded gold contract, for February delivery, settled down $25.70, or 1.5%, at $1,648.90 a troy ounce on the Comex division of the New York Mercantile Exchange. The front-month contract, for January, fell 1.5% to settle at $1,648.10 an ounce.
Gold began its slump in overnight trade, slipping to the lowest price since mid-August, after minutes from the Federal Reserve's last meeting were released Thursday afternoon. According to the minutes, several officials favored slowing or stopping the $85 billion-a-month bond-buying program before the end of 2013, sooner than many gold investors had expected.
The Fed minutes "sucked all of the oxygen out of the room for gold bulls," said Jeffrey Wright, a metals analyst with Global Hunter Securities.
The Fed's easy-money policies, some labeled quantitative easing, have helped boost gold prices since the 2008 financial crisis as investors worried about potential inflation and currency weakness sought shelter in precious metals.
On Friday, gold fell as low as $1,626 a troy ounce, the lowest intraday price since before Federal Reserve Chairman Ben Bernanke telegraphed the likelihood of a third round of quantitative easing to the market in August.
Gold later trimmed its losses after a mixed reading on the U.S. labor market reassured traders that still-high unemployment meant a policy shift from the Fed wasn't imminent.
The Labor Department said the unemployment rate stood at 7.8% in December, the same as November's upwardly revised figure. The central bank has said it would keep short-term interest rates near zero as long as unemployment is above 6.5% and inflation is modest.
Gold fell 0.4% for the week, the sixth consecutive weekly decline.
"I think this is an overreaction," Kurt Pfafflin, a senior broker with Daniels Trading, said of gold's retreat. Mr. Pfafflin said he didn't expect the Fed's easing efforts to end any time soon, and that low interest rates may continue to send investors looking for a higher yield into gold.
Still, a growing group of forecasters have said that gold's 12-year bull market may be near a turning point as the global economy slowly emerges from crisis mode.
"There's definitely much more bearish sentiment coming into this market," Mr. Pfafflin said.
Credit Suisse CSGN.VX +0.90% this week cut its gold-price forecast for 2013 by 5%, to $1,740 a troy ounce. That represents a gain of 4% from last year, but the investment bank expects declines in 2014 and 2015 on the view that the global economy's slow but steady recovery, and an eventual rise in interest rates, may sap demand for the precious metal as an alternative asset.
The long gold-bull market "is not dead yet in our opinion but nor is it in the best of health," Credit Suisse analyst Tom Kendall said. "The gold cycle is likely to peak this year."
