Gold falls sharply, closes below $1600 an ounce

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Associated Press

Posted on February 20, 2013 at 3:00 PM

Updated Wednesday, Feb 20 at 3:02 PM

Gold prices are falling sharply following the latest positive signs on the U.S. economy and signs of dissent at the Federal Reserve about continuing its bond purchases.

Gold for April delivery dropped $26.20, or 1.6 percent, to $1,578 an ounce, its first close below $1,600 an ounce since August.

News that the pace of home construction last month was the third-highest since 2008 was the latest indication that the U.S. housing market is recovering. That has helped diminish the appeal of gold as a defensive investment.

Also Wednesday, the Federal Reserve released minutes of its latest policy meeting revealing that some policymakers are doubtful about continuing the Fed's bond purchases. That could lead to higher U.S. interest rates and a stronger dollar, giving investors another reason to sell gold.

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