Gold drops below USD 1,200 for first time since June

London, Dec 19. Gold today fell below 1,200 dollar an ounce for the first time since June as improving US economy prompted the Federal Reserve to cut stimulus and reduced demand for precious metals as an alternative assets. Gold fell by 1.5 per cent to USD 1,199.63 an ounce, the lowest since June 28, silver by 2.2 per cent to USD 19.30 an ounce. The Fed said it will cut monthly bond purchases by USD 10 billion to USD 75 billion, citing an improved outlook for the US employment market ahead of jobless-claims data today. Prices tumbled 38 per cent since reaching a record in September 2011 as the US economic recovery gained momentum. Global equities have advanced to the highest in almost six years, and US inflation is running at 1.2 per cent. Gold rose 70 per cent from December 2008 to June 2011 as the Fed expanded its balance sheet through debt purchases, fueling expectations of accelerated inflation and a weaker dollar. Investor appetite for the precious metal waned this year as inflation failed to accelerate and the S&P 500 stocks Index reached all-time highs.