Gold Drops as Fed Chief Fails to Discuss Further Stimulus
Gold fell for a second day as Federal Reserve Chairman Ben S. Bernanke refrained from discussing steps to boost the U.S. recovery, while insisting the central bank will act if labor markets don’t improve.
Bernanke, responding to questions from lawmakers today in Washington, said Fed tools include further purchases of assets, such as mortgage-backed securities, reducing the interest rate it pays on reserves banks keep with the Fed, and altering its communications on the outlook for interest rates. Gold surged 70 percent from the end of December 2008 to June 2011 as the central bank kept borrowing costs at a record low and bought $2.3 trillion of debt in two rounds of so-called quantitative easing. This year, the price is up 1.4 percent.
“The market wants to know specifics even as it’s clearer that some form of easing will be announced soon,” William O’Neill, a partner at Logic Advisors in Upper Saddle River, New Jersey, said in a telephone interview.
Gold futures for August delivery slid 0.1 percent to settle at $1,589.50 an ounce at 1:36 p.m. on the Comex in New York, after earlier slipping as much as 1.3 percent. The price is down 0.9 percent in July, after dropping in four of the previous five months.
Bullion pared losses today after Bernanke’s answers to questions from the Senate Banking Committee signaled he doesn’t view inflation as a hindrance to providing more stimulus to spur the economy.
Silver futures for September delivery fell less than 0.1 percent to close at $27.316 an ounce on the Comex.
On the New York Mercantile Exchange, platinum futures for October delivery rose 0.2 percent to $1,420.70 an ounce. Palladium futures for September delivery advanced 1 percent to $583.35 an ounce.
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