Investing.com - Gold prices erased earlier gains in U.S. trading
on Wednesday after Federal Reserve Chairman Ben Bernanke said
monetary stimulus policies will stay in place though scale backs
were possible if economic indicators improve.
On the Comex division of the New York Mercantile Exchange, gold
futures for June delivery were down 0.48% at USD1,371.05 a troy
ounce in U.S. trading on Wednesday, up from a session low of
USD1,365.95 and down from a high of USD1,413.05 a troy ounce.
Gold futures were likely to test support USD1,323.00 a troy ounce,
the low from April 16, and resistance at USD1,444.15, the high from
In prepared testimony in Congress earlier, Bernanke said
ultra-loose monetary policy was providing "significant benefits" to
the economic recovery and reiterated that the bank's
asset-purchasing program will remain in place for now.
Bernanke added withdrawing monetary stimulus could prompt interest
rates to rise temporarily but could threaten the country's economic
recovery as well as price stability down the road.
"A premature tightening of monetary policy could lead interest
rates to rise temporarily but would also carry a substantial risk
of slowing or ending the economic recovery and causing inflation to
fall further," Bernanke said in prepared remarks of his testimony.
"Such outcomes tend to be associated with extended periods of
lower, not higher, interest rates, as well as poor returns on other
assets. Moreover, renewed economic weakness would pose its own
risks to financial stability."
Bernanke added that while the labor market is showing signs of
improvement, long-term employment rates remain high and consumer
Stimulus measures currently in place, such as the Fed's monthly
USD85 billion bond-buying program, weaken the dollar by flooding
the economy full of liquidity to keep interest rates low and
encourage investing and hiring, a recipe for rising gold prices.
Gold and the U.S. dollar tend to trade inversely from one another.
The dollar, meanwhile, regained its strength after Bernanke said
the U.S. central bank may scale back its stimulus measures "in the
next few meetings" if the labor market makes noted improvements.
Elsewhere on the Comex, silver for July delivery was up 0.06% at
USD22.468 a troy ounce, while copper for July delivery was up 1.25%
and trading at USD3.385 a pound.
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