NEW YORK, Jan 29 (Reuters) - COMEX gold tumbled below $400 an ounce Thursday as speculation that the Federal Reserve was moving toward raising interest rates stifled the dollar disinvestment that lifted gold to 15-year highs this month.
A slew of developments on the disposition of central bank gold reserves gave nervous speculators another incentive to take profits on their bullish bets.
Gold's nearly 4 percent drop on record volume opened the door to deeper losses in thinly traded precious metals like silver and palladium and also took the shine off of platinum.
April gold fell $16.40 to $399.40 an ounce, trading from $412.50 to $398.00, its lowest since Nov. 26. Estimated turnover was 200,000 contracts, unprecedented even including the 17,669 last minute switches before February first notice day Friday.
Funds had their first chance to respond after the U.S. central bank held rates steady at its two-day monetary policy meeting, which ended late Wednesday.
It was the dropping of the Fed's months-old pledge to keep rates at 45-year lows for a "considerable period" that triggered the shakeout. Instead, the Fed said it "can be patient in removing its policy accommodation."
"This is just the aftermath of the Fed's very, very slight change in policy, so to speak," said James Pogoda, a vice president of precious metals at Mitsubishi International Corp.
Gold prices rose 20 percent last year, continuing on to 15-year highs on Jan 6. The April contract reached $432.30 as speculators and investors diversified out of a tumbling dollar.
The dollar hit its lowest ever price against the 5-year-old euro on Jan. 12 at $1.2898. It was last at $1.2396/01.
Now, chart watchers see the potential for the correction to take another $20 off the gold price.
"You could make a case for a small 'head and shoulders' and have an ultimate goal of about $380," said a metals broker, referring to a price pattern on the charts that can signal a trend reversal to technical analysts.
Meanwhile, the German Bundesbank reiterated Thursday that it wants to join other central banks selling gold if the 1999 accord limiting central bank sales is renewed.
The Bundesbank said it wanted an option to sell 120 tonnes a year and favors keeping new terms close to the current five-year pact, which expires in September and limits total sales by the 15 participants to 400 tonnes a year.
A euro zone source said the limit could be raised to 2,500 tonnes over five years from the current 2,000 tonnes.
That followed closely Wednesday's news that the Central Bank of Norway sold 16 tonnes of gold bars in January to bolster its foreign currency reserves and plans to sell some 17 more tonnes to liquidate its hoard "at a later time."
But mixing the picture on Wednesday, Japan's Finance Minister said Tokyo was looking at the low weighting of gold in its foreign exchange reserves.
Japan has the lowest proportion of its reserve in gold of any industrial country except Canada, and the specter of buying by a major central bank helped gold go up $4.50 on Wednesday.
Spot gold fell to $399.10/9.85 from $410.20/80 late Wednesday. London's afternoon fix was $405.70.
COMEX March silver went down 40 cent, or 6.03 percent, to $6.23 an ounce. It traded from $6.565 to $6.12.
Spot fetched $6.20/22, down from the close at $6.51/53. The fix was at $6.535.
NYMEX April platinum dropped $28.80 to $823.00. Spot closed at $828.00/833.00.
March palladium lost almost 20 percent of its value, ending down $28.35 at $228.05. Spot was indicated at $222.50/228.50.