Federal Reserve Chairman Ben S. Bernanke told Congress the government doesn't plan to nationalize banks. President Barack Obama told lawmakers last night that the recession offers a chance to solve some of the nation's problems. Gold held by the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, was unchanged for a third consecutive session.
"People have been buying gold on economic Armageddon, so to see Obama and Bernanke paint a rosier picture, I'm not surprised to see gold come down a little bit," said Matt Zeman, a metals trader at LaSalle Futures Group Inc. in Chicago.
Gold futures for April delivery fell $3.30, or 0.3 percent, to $966.20 an ounce on the Comex division of the New York Mercantile Exchange. The price has declined 3.6 percent in the past three days after pushing past $1,000 to the highest since March on Feb. 20.
Silver futures for May delivery fell 12.1 cents, or 0.9 percent, to $13.91 an ounce in New York. The metal has jumped 23 percent this year.
Nationalization is when the government "seizes" a company, "zeroes out the shareholders and begins to manage and run the bank, and we don't plan anything like that," Bernanke told lawmakers in Washington today. He said the recession
may end in 2009 if policy makers can stabilize financial markets.
Investors have been buying gold this year as a store of value, driving the price up 9.3 percent and investment in the SPDR Gold Trust to a record 1,029 metric tons last week. Sales of 1-ounce American Eagle gold coins more than quadrupled to 92,000 in January, according to the U.S. Mint.
Still, a decline in prices may be an opportunity to buy, some investors said.
"Those who've not yet bought gold as insurance against economic chaos have their opportunity to do so now and we would strongly urge that," Dennis Gartman, an economist and editor of the Gartman Letter in Suffolk, Virginia, told his clients today.
U.S. stocks fell for the seventh day in eight after a report showed sales of previously owned homes unexpectedly declined in January, even as falling prices made them more affordable. Purchases fell 5.3 percent from December to an annual rate of 4.49 million, the fewest since 1997, the National Association of Realtors said today.
"The perception is that the economy is still pretty bad and that doesn't change with just one speech," said Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago. "They're trying to turn a very big boat. Gold benefits from the uncertainty and the recovery."
Gold may gain as U.S. leaders struggle to control inflation during a recovery, McGhee said. The Fed has slashed its benchmark interest rate to near zero and the government has pledged more than $9.7 trillion to helping ease the credit crisis and recession.
