Gold tarnished as Fed discusses end of easing

Gold prices fell more than 5 percent last week as hints of a strengthening US economy and a winding down of US Federal Reserve's stimulus undermined faith in the precious metal.

The most-traded December gold contract on the Shanghai Futures Exchange (SHFE) plummeted 5.72 percent last week to close at 275.11 yuan ($44.81) per gram, or $1,393.75 per ounce. The plunge included a 1.1 percent loss Friday.

The benchmark Comex gold future fell another 1.6 percent Friday to end the week at $1,364.70 per ton, capping of a loss of 5 percent for the week.

Friday marked the seventh straight daily loss for gold prices, its longest losing streak in four years, Reuters reported.

The market had a strong reaction to San Francisco Fed chief John Williams' statement Thursday that the US's central bank could begin cutting back on its monetary stimulus programs this summer, Reuters reported.

Gold has typically risen when the world's central banks undertake stimulus measures because the precious metal serves as a hedge against the inflation that can occur when excessive sums of money are pumped into the financial system. Inflation concerns will ease, however, if the Fed winds down their stimulus efforts.

A couple of key US economic indicators hit multi-year highs Friday, which further undermined confidence in gold.

The Conference Board's Leading Economic Index, which gauges future US economic activity, rose in April to its highest level in almost five years, Reuters reported Friday. In addition, consumer confidence in early May hit its highest point in nearly six years.

The US dollar rallied on the news. The US dollar index, which measures the greenback against a basket of currencies, rose more than 0.5 percent Friday to finish the week up 1.34 percent.