Gold prices dropped back below $1,700 an ounce on Thursday on disappointment the Federal Reserve didn’t announce more aggressive monetary easing. However, ETF investors haven’t been selling amid the recent price weakness, which historically has been a good sign for the precious metal.

On Wednesday, the Fed said it will buy $45 billion a month worth of Treasuries and continue purchasing $40 billion of mortgage securities. The central bank also announced it plans to keep interest rates near zero until the unemployment rates falls below 6.5%, as long as inflation remains low.

“This announcement is a bit confusing to gold investors as it linked policy to unemployment, etc.,” said a Tokyo-based trader in a Reuters report. “Perhaps the market wanted unlimited QE.”

“We view the [Fed] announcement as bullish, but with market expectations already factored in for some easing, we don’t expect prices to react robustly near-term,” added James Steel, an analyst at HSBC Securities, in a MarketWatch story. “In the long run, the ongoing monetary expansion is supportive of gold, especially if it is a factor weighing on the U.S. dollar.”

Jeffrey Nichols, senior economic advisor to Rosland Capital, in a recent note said gold continues to disappoint, mired in a trading range between $1,700 and $1,750 an ounce. [Gold ETFs Gain Inflows Despite Price Weakness]

“Recent efforts to move higher have been thwarted by stepped-up speculative selling and softer physical demand with many buyers now conditioned to wait for the next dip. At the bottom of this range, bargain hunting in the form of stepped up physical demand from central banks, sovereign wealth funds, and some of the gold-friendly hedge funds has created a floor under the market,” he wrote.

Looking ahead, gold prices should be extremely sensitive to the outlook on the U.S. fiscal cliff. [How Gold ETFs Would React if the U.S. Falls Over the Fiscal Cliff]

Despite the recent trend lower in gold prices, ETF investors haven’t budged. The amount of bullion in gold-backed exchange traded products is at record highs.

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