Gold fell for a third day after U.S. Federal Reserve Chairman Ben S. Bernanke hinted at scaling back stimulus should the world’s largest economy strengthen further, and as investor holdings extended declines.
Spot gold dropped as much as 1 percent to $1,357 an ounce and traded $1,359.63 at 9:24 a.m. in Singapore. Prices lost 0.4 percent yesterday, reversing gains of as much as 2.8 percent, after Bernanke said that the Fed may reduce the pace of asset purchases in the next few meetings if policy makers can be confident of sustained improvement in the economy. The remarks sent the dollar 0.6 percent higher against a six-currency basket.
Gold tumbled into a bear market in April as some investors lost faith in the metal as a store of value and investment holdings contracted. Prices are down 19 percent this year on concern the Fed may rein in the quantitative-easing measures that helped bullion cap a 12-year bull run in 2012. The Fed currently buys $85 billion of Treasury and mortgage debt a month.
“Gold declined as the U.S. dollar strengthened after the U.S. Federal Reserve Chairman Ben Bernanke signaled that monetary stimulus may scale back soon if the U.S. economy remains strong,” Lachlan Shaw, an analyst at Commonwealth Bank of Australia, wrote in an e-mail.
Bullion for June delivery dropped 0.8 percent to $1,356.70 an ounce on the Comex in New York after falling for nine of the past 10 days. Futures have retreated 19 percent this year.
Assets in the SPDR Gold Trust, the biggest bullion-backed ETP, dropped to 1,020.07 metric tons yesterday, the lowest since February 2009, and are down 24 percent this year, according to data on the company’s website.
Cash silver declined 1.2 percent to $22.0265 an ounce, platinum lost 0.7 percent to $1,458.55 an ounce, and palladium fell 0.7 percent to $741.50 yesterday.