By Frank Tang
NEW YORK | Wed Jun 8, 2011 1:19pm EDT (Reuters) - Gold fell on Wednesday as the dollar index gained a day after Federal Reserve Chairman Ben Bernanke offered no hints of further U.S. monetary easing but acknowledging the economy has slowed. Bullion investors were disappointed with the uncertainty over whether the Fed would embark on a new round of government bond buying, a form of money creation known as quantitative easing. Gold is up 5 percent in the past three weeks on bleak U.S. economic data, including a weak jobs report. "It is very doubtful now that the United States will be raising interest rates over the next 12 months, which means the negative interest rate environment in the U.S. is going to stay," said VM Group analyst Carl Firman. "That will leave investors looking for higher returns elsewhere, and gold is one beneficiary of that." Spot gold was down 0.3 percent at $1,537.85 an ounce at 12:04 p.m. EDT. U.S. gold futures for August delivery fell $4.40 an ounce to $1,539.60. Bullion hit a record $1,575.79 an ounce on May 2. Silver was down 1.2 percent at $36.68 an ounce, taking its direction from gold. VTB Capital analyst Andrey Kryuchenkov said while Bernanke's comments did not indicate a third round of quantitative easing, there are "still no rate hikes and inflation (is) tamed in the medium term, so gold could remain supported for now." Despite Wednesday's recovery in the dollar, in the longer term, gold is set to be supported by dollar weakness with the Fed showing no signs of reversing its easy interest rate policy. The dollar was up around half a percent against a basket of six other major currencies .DXY, but it hit a one-month low against the yen over U.S. economic worries.
Source: http://www.reuters.com/article/2011/06/08/us-markets-precious-idUSTRE74F62H20110608 [ Back ]