BLBG:Gold Drops as Bernanke Says Growth Intact, Offers No Additional Stimulus
Gold fell for the first day in three after Federal Reserve Chairman Ben S. Bernanke said that growth will resume, boosting speculation the central bank may not add extra stimulus and eroding the appeal of haven investments.
Immediate-delivery gold traded 0.3 percent lower at $1,822.55 an ounce at 11:26 a.m. in Singapore, after dropping 1.2 percent earlier. The metal has slumped as much as 11 percent from its all-time high of $1,913.50 on Aug. 23 as equities rebounded. December-delivery bullion in New York rose 1.5 percent to $1,824.70 after gaining as much as 2.5 percent.
Bernanke said the recovery is likely to improve in the second half, and the Fed can aid the recovery if needed, without giving details on what policy makers may do. A second day has been added to the Federal Open Market Committee meeting next month for “a fuller discussion” of the economy and the Fed’s possible response, he said at Jackson Hole, Wyoming on Aug. 26.
“The likelihood of QE3 has diminished and the dollar is slowly gaining traction after its low in May, and these will turn investors away from gold in the near term,” said Ye Yanwu, deputy head of research at Everbright Futures Co., referring to further asset purchases or so-called quantitative easing.
Exchange-traded product holdings fell for a sixth day on Aug. 26 to 2,152.049 metric tons after reaching a record 2,216.756 tons on Aug. 8, Bloomberg data show. Hedge funds and other money managers trimmed their net-long gold positions by 6 percent to 187,681 contracts in the week to Aug. 23, data from the U.S. Commodity Futures Trading Commission showed.
Stocks, Dollar
Asian stocks climbed for a third day today, joining an advance in U.S. and European equities, while the dollar is poised for its biggest monthly gain since May. CME Group Inc., owner of the Comex in New York, plans to open electronic and floor trading as regularly scheduled, according to a statement issued after Hurricane Irene weakened into a tropical storm.
“The risks of a global slowdown are still very real and while investors are optimistic today, the market just needs a little bit of bad news to take it higher again,” said Ye, referring to the gold market.
Hiring probably slowed in August and U.S. manufacturing contracted for the first time in two years, economists said before reports this week. U.S. gross domestic product climbed at a 1 percent annual rate from April through June, down from a 1.3 percent prior estimate, revised Commerce Department figures showed Aug. 26. Another report the same day showed consumer sentiment this month fell to the lowest level since 2008.
Spot silver was little changed after dropping as much as 0.7 percent to $41.0537, while palladium fell as much as 0.9 percent to $753.25 an ounce. Cash platinum traded 0.4 percent higher at $1,842.25 an ounce.
To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net
To contact the editor responsible for this story: Richard Dobson at rdobson4@bloomberg.net
