Gold prices began declining yesterday after Fed Chairman Ben Bernanke said that decision to scale back or taper bond buying can come in one of Fed’s next few meetings if the economy looked set to maintain the pace and labor market looks improving. Gold had been trading close to the 1405 price but ended the day at 1367 giving back the day’s gains to end the day in the red. This sentiment has edged into this morning’s session with gold down another 1.65.
This week, has had very little data but a lot of Fed Presidents were scheduled to speak and they all made the headlines, putting the greenback and gold on a roller coaster. Late in the day, the FOMC minutes were released from the May 1st meeting. The minutes showed that the members were leaning towards a tapering of the monthly stimulus as it will be a very long project for the Fed to unwind their purchases and their monthly commitment. Mr. Bernanke sent the US dollar climbing. The dollar had been around 83.95 mid-day yesterday but was able to climb to trade at 84.44.
Gold futures fell sharply, following US Federal Reserve Chairman Ben Bernanke’s testimony before Congress as investors considered the likelihood that the central bank will soon begin to tighten monetary policy. Gold prices added to gains as Bernanke’s comments implied that premature tightening of Fed policy could end growth, then prices fell after he indicated that the central bank could slow asset purchases in the next few meetings.
Gold holdings of SPDR gold trust, the largest ETF backed by the precious metal, declined to 1,020.07 tons, as on May 22. Silver holdings of ishares silver trust, the largest ETF backed by the metal, declined to 10,022.95 tons, as on May 22.
US Federal Reserve Chairman Ben Bernanke at testimony to Congress on Wednesday said that the Fed’s massive bond-buying program would remain in place for now. But a decision to scale back the $85 billion in bonds the Fed buys each month could be taken at one of the central bank’s “next few meetings” if the economy looked set to maintain momentum, he added. Talk about Fed speak, what Mr. Bernanke said was a bunch of would haves, could haves, might and might not’s, but he did clearly indicate that there would be no change at the June meeting.
Silver followed cues from gold as there was very little data to help give any guidance to the metals pack that is until this morning when HSBC released its monthly Chinese manufacturing PMI report, this much followed report turned markets upside down. Not only did the report miss expectations, it showed a contraction rather than an expansion in the manufacturing sector. Markets are just now reacting to the data with silver falling over 37 cents this morning to trade at 22.108 and copper is following close on its heels at 3.319 after hitting a 6 week high yesterday. Metal traders will closely watch eurozone PMI data due later, which is expected to miss expectations and might send metals further down.