LONDON: Gold slumped close to a three-year low after the US Federal Reserve signalled it would wind down its massive stimulus programme this year, dealers said.

On the London Bullion Market, the price of gold tumbled as low as $1,287.91 an ounce as the dollar weakened -- the precious metal striking a point last seen in late September 2010.

Meanwhile, London's benchmark FTSE 100 index slid 2.04 percent to stand at 6,219.47 points in late morning deals, Frankfurt's DAX 30 dived 2.08 percent to 8,027.23 points and in Paris the CAC 40 shed 2.02 percent to 3,761.82.

The European single currency fell to a 10-day low at $1.3183, down from $1.3297 in New York late on Wednesday.

However, in a news conference, Fed chairman Ben Bernanke said that the US central bank's policy committee "currently anticipates that it would be appropriate to moderate the monthly pace of purchases later this year" if the economic outlook continued to improve.

"Ben Bernanke has put the cat well and truly among the pigeons with his statement that asset purchases would begin slowing by the end of this year," said analyst Yusuf Heusen at trading firm IG.

"It does feel as if the Fed chairman has pulled the rug from underneath the stock market rally, and he certainly seems to have dealt a killer blow to gold."