Gold price dove $26.30, or 1.7%, Thursday morning to $1,522.65 per ounce as the U.S. dollar spiked higher

The gold price dove $26.30, or 1.7%, Thursday morning to $1,522.65 per ounce as the U.S. dollar spiked higher. The price of gold faced heavy selling pressure, as did stock and commodity prices, after European Central Bank President Jean-Claude Trichet warned that the sovereign debt crisis poses a “serious threat” to the financial stability of the European Union. The euro fell sharply on the news and a wave of liquidation swept through global markets.

Crude oil, copper, and silver fell 4.4%, 1.7%, and 1.9%, respectively. Over longer period of time, gold acts in a counter-cyclical manner, however, the yellow metal has repeatedly shown that it is not immune to periods of rising risk aversion.

The gold price showed a muted reaction to the Fed announcement and Bernanke’s comments as the central bank largely met the market’s expectations. In its policy statement, the Federal Reserve wrote that the economic recovery is proceeding at a “moderate…though somewhat more slowly” than it had expected. It also noted that “recent labor market indicators have been weaker than expected.”

The Fed once again left in the “extended period” language with respect to keeping interest rates near zero, a decision that was unanimous. While the Fed acknowledged that economic growth is slowing, the policy statement did not offer any signals that the U.S. central bank is considering a third round of quantitative easing (QE3). With regard to inflation, the Fed noted that while it has “picked up in recent months…longer-term inflation expectations have remained stable.”