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Summary Spot gold was down 1.2 percent at $1,625.30 an ounce.
Gold prices fell more than 1 percent to their lowest in nearly three months after minutes from the U.S. Federal Reserves March meeting suggested a fresh round of monetary stimulus was unlikely as the U.S. economy gradually improves.Ultra-loose monetary policy, which keeps real interest rates and consequently the opportunity cost of holding gold low, helped push the metal to record highs in 2011. Expectations the Fed would instigate another round of quantitative easing sent prices above $1,790 an ounce in February. But minutes of the central banks latest policy meeting published on Tuesday showed only two of the policy-setting Federal Open Market Committees 10 voting members saw the case for additional monetary stimulus.The minutes by the Fed indicated that there would be no quantitative easing unless the economy takes a dip for the worse - gold immediately sold off on that and now the dollar is stronger too, so thats weighing on gold, said Standard Bank analyst Walter de Wet.I wouldnt be surprised if we push lower towards $1,600 - that is what we think is a floor and we are unlikely to fall substantially below that, he said, adding that strong buying out of Asia was limiting the metals losses.Spot gold was down 1.2 percent at $1,625.30 an ounce at 1138 GMT, having earlier touched a low of $1,620.29, its weakest level since Jan. 10. U.S. gold futures for April delivery were down $44.80 an ounce at $1,627.10.De Wet said gold was likely to push higher longer-term and would probably rise above $1,900 towards the end of the year.We dont see real interest rates positive this year ... We still think globally that monetary supply will continue to grow - maybe not to the same rate as it did but certainly its going to grow and these things are positive for gold.Gains in the dollar exerted pressure on gold as the Fed minutes helped push the U.S. unit to a two-week high against the euro on Wednesday. A stronger dollar tends to weigh on gold, which is priced in the U.S. currency.World stocks and oil both fell after the Fed dimmed hopes for more asset-buying.The Fed has a high bar for additional easing and investors should not really expect that the news flow will be conducive to the Fed putting in additional easing by the end of April or even June, Wells Fargo Advantage Funds strategist Brian Jacobsen said after the minutes were released.A spate of better-than-expected economic data out of the U.S. in recent weeks has curbed investor appetite for gold, which generally benefits from weak economic conditions due to its status as a safe haven and store of value during inflation.The U.S. economy seems to be somewhat on its own in terms of growth ramp-up just as Europe nears recession, while Chinas growth remains suspect despite this weekends stronger PMI number, INTL FCStone analyst Edward Meir said in a note.This means that the dollar will likely push higher from here, not necessarily a fertile backdrop for either metal (gold or silver), he added.Investors will be looking at Automatic Data Processings (ADP) employment report for March due at 1215 GMT for clues about the health of the U.S. labour market ahead of Fridays payrolls numbers.The European Central Banks (ECB) governing council is also due to meet later in the session and is expected to hold interest rates at a record low of 1 percent. Low interest rates keep the opportunity cost of holding gold low.Precious metals were weaker across the board, with spot silver down 2.4 percent at $31.85 an ounce, spot platinum down 1.3 percent at $1,613.99 an ounce, and spot palladium down 0.7 percent at $643.97 an ounce.
