Gold Futures Drop to Three-Week Low

Possibly connected to rumors that Fed will scale back stimulus efforts

Gold futures tumbled to a three-week low on speculation that the Federal Reserve may signal a reduction on U.S. economic stimulus. Palladium dropped to the cheapest in more than a month as European car sales plunged.

Fed policy makers start a two-day meeting today. The central bank currently buys $85 billion a month of Treasuries and mortgage debt. Chairman Ben S. Bernanke said last month the pace of purchases may be scaled back if the employment outlook shows sustainable improvement. Physical gold demand in North America and Europe has dropped 80 percent from April, Kitco Metals Inc. said in a report.

"Everybody is waiting for tomorrow's statement," Frank Lesh, a trader at FuturePath Trading in Chicago, said in a telephone interview. "There is a complete lack of interest on the physical side."