Gold Futures Extend Post-Bernanke Losses
Gold futures fell in electronic trade Thursday, extending their losses after Federal Reserve Chairman Ben Bernanke said there was no set timetable for slowing U.S. monetary stimulus.
Gold for August delivery lost another $2.10, or 0.2%, to $1,275.40 an ounce after dropping $12.90 during Wednesday trade on the Comex division of the New York Mercantile Exchange.
Bernanke’s comments Wednesday came under scrutiny for clues as to when the Fed would reduce its bond purchases.
Gold had initially gained after Bernanke’s opening statement in his testimony to the House of Representatives, but it soon retreated as some analysts cited a more hawkish tone to his question-and-answer session with lawmakers.
The Fed’s stimulus is generally seen as supportive of gold.
Bernanke’s remarks also drove the dollar higher, with a rising U.S. currency weighing on dollar-denominated gold by making it more expensive to holders of euro, yen and other units.
The greenback extended those gains modestly in early Thursday trading, with the ICE dollar index rising to 82.751 from 82.715 late Wednesday.
HSBC cited its chief U.S. economist Kevin Logan as saying “Bernanke’s comments only added fuel to the uncertainty,” and that a tapering of the Fed’s bond purchases could come either at the central bank’s September or December meetings, depending on the strength of economic data over the next two months.
The Fed chief was due to speak before the Senate later Thursday.
HSBC also said bullion prices had come under pressure from reported hedging at some major miners, including Russia’s Petropavlovsk PLC
“By our estimates, producer hedging was virtually zero in 2012, and should other miners follow suit in hedging their exposure, this would be ostensibly bearish for gold,” they wrote late Wednesday. “A significant amount of hedging could put a considerable amount of gold onto the paper market and weigh on prices.”
However, the analysts also said that physical demand from China and India could help put a floor under prices. “Since investment demand is weak, with ongoing gold [exchange-traded fund] liquidation, a strong physical market is crucial if gold prices are not to sink considerably further,” HSBC added.
Meanwhile, hedge-fund billionaire John Paulson spoke in favor of holding gold at the Delivering Alpha conference Wednesday in New York.
“While the Fed has printed a lot of money, there is very little inflation. But the rationale for owning gold has not gone away,” he said, citing what he saw as the continuing need for investment alternatives to the U.S. dollar.
Paulson also said, however, that gold takes up only 2% of his fund’s portfolio.
In other metals action Thursday, September silver fell in tandem with gold, retreating 10 cents, or 0.5%, to $19.33 an ounce.
September copper dropped a penny, or 0.2%, to $3.12 a pound, extending Wednesday’s almost 6-cent pullback.
Among other metals, October platinum fell $3.60, or 0.3%, to $1,407.40 an ounce, but September palladium saw rose 5 cents to $735.50 an ounce.
Source : Marketwatch
