Gold prices slid towards $1,200 an ounce

LONDON, Oct 30 (Reuters): Gold prices slid towards $1,200 an ounce on Thursday, hitting their lowest in 3-1/2 weeks, after the Federal Reserve ended its bond-buying stimulus programme on an unexpectedly hawkish note.

Spot gold fell as low as $1,201.21 an ounce and was down 0.5 per cent at $1,206.40 an ounce at 1015 GMT. US December gold futures were down $19 at $1,205.80.

The Fed statement on Wednesday sent the dollar to its highest since Oct. 6, while U.S. rate futures shifted to show better-than-even chances of a rate hike next September. Previously, they had indicated a rise in October.

That dented interest in gold, which as a non-yielding asset tends to benefit from ultra-low rates.

"I'm not saying that we're going to get a higher interest rate environment any time soon, but the signals are there," Simon Weeks, head of precious metals at the Bank of Nova Scotia, said. "$1,200 might hold today, but overall I think it will be broken, and we'll look at that double bottom at $1,180 again."

Gold, which hit a 15-month low of $1,183.46 earlier this month -- a level it had already bounced off in 2013 -- fell 1.3 per cent on Wednesday after the Fed statement was released.

The U.S. central bank largely dismissed financial market volatility, a slowdown in Europe and a weak inflation outlook as factors that might limit progress towards its unemployment and inflation goals.