SAN FRANCISCO (MarketWatch) — Gold futures marked their lowest settlement in more than three years on Thursday as the Federal Reserve’s January tapering plans and a rally in the U.S. dollar sank prices below $1,200 an ounce.

Gold for February delivery US:GCG4, the most-active contract, tumbled $41.40, or 3.4%, to settle at $1,193.60 an ounce on the Comex division of the New York Mercantile Exchange. Futures prices touched intraday lows under the key $1,200 level for the first time since June and they also suffered their biggest one-day loss since June.

Prices, based on front-month futures contracts, logged their lowest close since August 2010, according to data from the CME Group CME, -0.97% . December gold GCZ23, , which is the front-month for gold futures though traded on very low volume, settled at $1,195 Thursday.

March silver US:SIH4 was hit even harder Thursday, down 87 cents, or 4.4%, to end at $19.19 an ounce.

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Shortly after the Fed decision was announced, which followed the close of gold trading on Comex Wednesday, February gold prices climbed, then gave it all back. They had settled Wednesday at $1,235.

The Fed said it would cut its pace of monthly asset buys to $75 billion from $85 billion. The move surprised some, as many didn’t expect a decision to taper the stimulus program until the new year.

“Less printing (however small) theoretically leads to less dilution of the U.S. dollar, which theoretically leads to less inflation, which logically would be bad for gold,” said Adam Koos, president of Libertas Wealth Management Group. And “this market is so emotionally driven, so hot, and so extended, even the smallest piece of news can cause big changes in investor decision making.”

The Fed decision “doesn’t leave a mark, relatively speaking,” he said. “But it obviously didn’t fare well for gold, especially when you combine the news with investors likely affecting some tax-loss harvesting with their gold positions.” Tax-harvesting is a year-end strategy for investors who take losses on some investments to offset taxes on gains in others.

Strong gains for the dollar Thursday also put pressure on dollar-denominated gold prices. The dollar index DXY, +0.03% traded at 80.602 from 80.477 late Wednesday.

Forward guidance by the Fed is impacting the gold prices too “as many do not see inflation rising up any time soon,” said Naeem Aslam, chief market analyst at AvaTrade.

Gold has broken the $1,200 level but that “does not ring too many alarm bells for us,” he said. A break of $1,181 would “certainly call all bets off.”

Support was formed at the $1,181 level back in June, he said. It “does have a significant importance and it could be a buy opportunity.” The next support is near the $1,084 level, followed by $1,044, “which we are certainly calling the ultimate low for gold for next year,” he said.

The selling was broad elsewhere in metals trading Thursday, with January platinum US:PLF4 down $24.30, or 1.8%, to $1,318.40 an ounce, while palladium for March delivery US:PAH4 shed $3.15, or 0.5%, to $696.30 an ounce.

High-grade copper HGH24, gave up over 2 cents, or 0.7%, to $3.296 a pound.

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