Gold flat, tumbles then recovers after Fed

By Frank Tang and Jan Harvey

NEW YORK/LONDON (Reuters) - Gold was flat on Wednesday in a volatile session that saw the precious metal tumble $10 an ounce after the Federal Reserve ended a two-day policy meeting, then quickly recover those losses and briefly turn higher.

Analysts said gold tumbled in a knee-jerk sell-off after the Fed disappointed investors who had hoped for steps to ease monetary policy even more. But it quickly recovered as the central bank repeated its promise to keep rates near zero until at least late 2014.

Gold has lost more than $150 an ounce since the end of February, as some funds have reduced their bullish position after a strong run of economic indicators dashed hopes of further monetary easing.

"Gold is not at the forefront of anybody's trading book at this moment," said George Nickas, a precious metals broker at commodities firm INTL FCStone.

Nickas said that the market might have oversold after falling toward the lower end of a well-supported trading range, as there were few surprises in the Fed's policy statement at the end of a two-day meeting.

Spot gold was down 0.2 percent at $1,638.80 an ounce by 1:07 p.m. EDT (1707 GMT), off a session low of $1,623.90 an ounce.

Gold futures for June delivery were down $4.50 an ounce at $1,639.30.

Policy makers offered no new clues about whether the Fed will stick to its June target for ending Operation Twist, its latest effort to keep down long-term rates.