Gold drops sharply

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NEW YORK, Feb. 20 (UPI) -- Gold prices stumbled Wednesday, dropping sharply below $1,600, after the Federal Reserve released meeting minutes that showed ambivalence on asset purchases.

Meeting minutes showed widely divergent views on the Fed's $85 billion per month asset purchasing. The Fed has said it would likely maintain its present strategy until the unemployment rate drops to 6.5 percent. But the minutes showed policy makers divided on the issue with some advocating for dropping the program early and others warning that a switch too early would derail the economic recovery.

Equities also took a fall on the report. Gold, however, is used as a hedge against inflation, which is affected by how much liquidity the Fed pumps into the economy. A faster recovery would likely bring with it faster inflation, so indications that the Fed will drop a liquidity program has an adverse affect on gold prices.

Gold gave up $40.50 to close at $1,563.70 an ounce on the Comex division of the New York Mercantile Exchange Wednesday.

Silver also dropped Wednesday, losing 85 cents to $28.57 an ounce.

Against the dollar, the euro fell to $1.3285 from Tuesday's $1.3389. Against the yen, the dollar was higher at 93.69 yen from 93.57 yen.