May 21 (Bloomberg) -- Gold and silver futures resumed slumps on speculation that the Federal Reserve may scale back U.S. debt purchases, curbing demand for the precious metals as a store of value.
Fed Chairman Ben S. Bernanke will discuss the economic outlook in congressional testimony and the central bank will publish minutes of its latest meeting tomorrow. The bank buys $85 billion of Treasury and mortgage debt a month. The dollar advanced as much as 0.6 percent against a basket of currencies. Yesterday, gold gained 1.4 percent, snapping the longest skid in four years.
“Tomorrow’s minutes are very important as there is some concern that the Fed may want to cut back on the stimulus,” Michael Smith, the president of T&K Futures & Options in Port St. Lucie, Florida, said in a telephone interview. “Also, the dollar’s strength is working against gold.”
Gold futures for June delivery fell 0.5 percent to settle at $1,377.60 an ounce at 1:43 p.m. on the Comex in New York. Trading was 30 percent above the average in the past 100 days for this time, according to data compiled by Bloomberg.
Yesterday, the price rebounded after touching $1,336.30, the lowest for a most-active contract since April 18. That snapped a seven-session slump, the longest since March 2009.
Gold has tumbled 18 percent this year, falling into a bear market last month as some investors lost faith in the metal after equities rallied. Fed Bank of Chicago President Charles Evans said yesterday the economy has improved “quite a lot.”
Yesterday, holdings in exchange-traded products dropped 10.9 metric tons to 2,187.4 tons, the lowest since July 2011. They have tumbled 17 percent this year, according to the latest Bloomberg data.
Sales from ETPs “will put downward pressure on prices,” said David Lennox, a resource analyst at Fat Prophets in Sydney.
Silver futures for July delivery fell 0.6 percent to $22.455 an ounce on the Comex. Yesterday, the price touched $20.25, the lowest since Sept. 14, 2010.
On the New York Mercantile Exchange, palladium futures for June delivery declined 0.4 percent to $748.10 an ounce.
Platinum futures for July delivery were 1.8 percent lower at $1,458.40 an ounce, the biggest drop since May 10.
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