MW: Gold falls after upbeat U.S. economic data, Bernanke
By Myra P. Saefong and Sarah Turner, MarketWatch
SAN FRANCISCO (MarketWatch) — Gold futures traded lower Wednesday, pressured as comments from Federal Reserve Chairman Ben Bernanke fueled strength in the dollar and as upbeat U.S. economic data dulled safe-haven investment demand for the precious metal.
Metals investors also digested news that the European Central Bank will offer a larger-than-expected amount of loans to the region’s banks.
Gold for April delivery GCJ2 -3.12% fell $11.90, or 0.7%, to $1,776.50 an ounce on the Comex division of the New York Mercantile Exchange.
“Gold is likely down on profit taking after the positive PMI and nervousness regarding Bernanke’s testimony and his suggestion that the Fed will not ease further,” said Mark O’Byrne, executive director at GoldCore.
The Chicago-area business barometer, which also is known as the Chicago PMI, accelerated to a reading of 64.0% in February from 60.2% in January, ISM-Chicago said.
And in testimony prepared for the House Financial Services Committee, Bernanke said that recent improvement in employment has put the Fed on alert and that it’s watching incoming data closely.
Bernanke stopped short of saying the improvement in the jobless rate meant a better economy ahead. But if it was enough of a hint of less policy accommodation to send gold futures lower. Read more on Bernanke.
The comments also helped strengthen the dollar, which in turn put pressure on dollar-denominated gold. The ICE dollar index DXY +0.51% DXY +0.51% rose to 78.430, up from 78.206 before Bernanke’s testimony and from 78.222 on Tuesday.
The greenback had traded a bit lower earlier, after the European Central Bnak allotted a bigger-than-expected 529.5 billion euros ($713.4 billion) in loans to 800 banks, in its second and possibly final long-term refinancing operation. Read more on the ECB LTRO operation
Gold investors also digested the latest upbeat news on the U.S. economy.
Of note, the Commerce Department reported revised growth of 3% for gross domestic product in the fourth quarter, faster than originally reported. Economists surveyed by MarketWatch had predicted GDP growth would be revised down to a 2.7% for the final three months of 2011 from an initial reading of 2.8%. Read more on GDP.
“The very positive [Chicago PMI] figure seems to have paused gold’s gallop,” said O’Byrne.
“But the fundamentals of ultra loose monetary policies and currency debasement is supporting gold, which is looking better technically also,” he said.
Gold prices jumped $13.50, or 0.8%, to settle at $1,788.40 an ounce on the Comex division of the New York Mercantile Exchange on Tuesday. That was gold’s best finish since mid-November. Read more on Tuesday’s gold trade.
Other metal futures traded mixed Wednesday.
Silver for March delivery SIH2 -3.18% fell 26 cents, or 0.7%, to $36.88 an ounce, while March high-grade copper futures HGH2 -0.51% traded up a penny at $3.92 per pound.
Platinum for April delivery PLJ2 -1.67% were up 50 cents at $1,724 an ounce, with March palladium PAH2 -0.49% gaining $3.25, or 0.5%, to $716.50 an ounce.
