Gold steady, market seeks clues on US policy move Gold is trading at $1 541,50 in early trade on Wednesday as traders react to Bernanke comments. RUJUN SHEN Published: 2011/06/08 09:22:44 AM Gold was steady on Wednesday as investors waited for hints on the US central bank’s next policy move after its chairman acknowledged the economy had slowed, while a slight rebound in the dollar weighed on prices. Gold breached $1 550 for the second straight session on Tuesday, but failed to close above that key level as the lack of clues on further stimulus plan in Federal Reserve Chairman Ben Bernanke’s remarks kept investors on edge. "Gold lacks momentum for a rally but does not have much room on the downside," said Li Ning, an analyst at Shanghai CIFCO Futures. "We need some earth-shattering news to stimulate the market." If the Fed flagged further quantitative easing, it would drive investors, wary of future inflation, to store their value in bullion, traders say. But IMF acting chief John Lipsky said the Fed does not need to consider additional monetary policy stimulus as the world’s largest economy is likely to pick up in coming quarters due to growth in exports and disposable incomes. Spot gold ticked down about 0,1% to $1 541,50 an ounce by 0611 GMT, snapping a three-day winning streak. US gold was little changed at $1 543. A slight increase in the dollar , from one-month lows hit after Bernanke’s sombre assessment of the US economy and a Chinese official’s warning on holding excessive dollar-denominated assets, weighed on gold prices. Gold is likely trapped in a range between $1 530 to $1 550 before any decisive move, traders and analysts said. Technical analysis suggested that gold could be due for a deep correction, according to a Reuters market analyst Wang Tao. A raft of sluggish data recently showed the US economy was losing steam, just as the Fed’s $600bn bond purchase programme — which has flooded markets with cheap cash and boosted prices of gold and other commodities — is due to complete by the end of the month. Potentially supportive of gold, an increasing number of Republicans said a brief US default might be an acceptable price to pay if it forces the White House to deal with runaway spending. "This has significant downside risks for industrial raw material, and is highly positive for precious metals. It has dire implications for the economy at a time when the macro data is softening," said Ben Westmore, commodities economist at National Australia Bank. Spot silver lost as much as 1,2% to $36,66, before rebounding slightly to $36,91, down half a%. "The discouraging economic outlook has affected the stock market, as well as metals with industrial applications, such as silver," said a Hong Kong-based dealer. Asia stocks softened on Wednesday, after the comments from Bernanke added to fears about the strength of the global economy. Silver, which leads the precious metals complex with a near 20-percent year-to-date rise, is expected to outperform other precious metals over the long term, as investors may continue to favour its leverage to gold, said Austria-based hedge fund Superfund. Platinum group metals also edged lower. Spot platinum dropped 0,4% to $1 820,99. Spot palladium fell 0,3% to $801,97, after rising to a three-month high of $807,50 on Tuesday.

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