SINGAPORE (Reuters) - Gold languished at a six-month low on Friday and was on the edge of tipping over to a 3-1/2 year trough after the Federal Reserve's move to cut back its bond-buying stimulus prompted a huge sell-off.
The metal is heading for its worst weekly performance in three months and its biggest annual loss in 32 years.
FUNDAMENTALS
* Spot gold had gained 0.2 percent to $1,191.91 an ounce by 0016 GMT, after earlier hitting its lowest since June at $1,185.10. Gold touched $1,180.71 in late June - its weakest since 2010.
* On Wednesday, the day of the Fed announcement of a $10 billion cut in its monthly bond purchases, gold fell 1 percent. But the selling picked up on Thursday, with the metal losing 2 percent.
* It has lost nearly 4 percent for the week, and 29 percent for the year.
* The Fed's $85 billion in monthly bond purchases, along with other monetary stimulus measures, had fuelled a big run-up in gold prices in the last few years, with the metal hitting an all-time high of $1,920.30 in 2011.
* However, with an improving economy and stubborn low-inflation in the United States, gold's appeal has dropped off.
* SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 3.90 tonnes to 808.72 tonnes on Thursday.
* Russian precious metals and gems repository Gokhran may consider buying palladium on the market to increase its stocks, its new head Andrey Yurin said, signalling a possible change in strategy.
MARKET NEWS
* Asian shares got off to a cautious start on Friday tracking a more circumspect session on Wall Street overnight, as investors reassessed the Fed's policy outlook following its decision this week to start tapering its massive stimulus.
(Reporting by A. Ananthalakshmi; Editing by Joseph Radford)
