Tags: gold | silver | fed | metals

Gold Falls to 12-Week Low on Fed Stimulus Outlook; Silver Slumps

Wednesday, 04 Apr 2012 12:19 PM

Gold fell to a 12-week low in New York as the dollar strengthened on signs the Federal Reserve may refrain from providing more stimulus measures. Silver retreated the most in five weeks.

The Fed will hold off on increasing monetary accommodation unless economic expansion falters or prices rise at a rate slower than its 2 percent target, according to minutes of a March 13 policy meeting released yesterday. The dollar rose as much as 0.6 percent against a basket of six currencies.

“The market has decided that yesterday’s statement is probably the final nail in the coffin,” Frank Lesh, a trader at FuturePath Trading in Chicago, said in a telephone interview. “Gold is reacting to the strength in the dollar.”

Gold futures for June delivery slipped 3.1 percent to $1,620.40 an ounce at 11:52 a.m. on the Comex in New York, the biggest drop for a most-active contract since Feb. 29. Earlier, prices plunged to $1,614, the lowest since Jan. 10.

Prices also tumbled as jewelers in India, the world’s biggest importer, extended a nationwide strike for a 19th day to protest a tax on non-branded ornaments.

Silver futures for May delivery slumped 5.5 percent to $31.45 an ounce on the Comex. A close at that level would make it the biggest drop for a most-active contract since Feb. 29.

Silver was the biggest decliner on the Standard & Poor’s GSCI Spot Index of 24 raw materials.

“The move is more pronounced in silver as people look at silver both as an industrial metal as well as a precious metal,” Gijsbert Groenewegen, a partner at Silver Arrow Capital Management, said in a telephone interview in New York.


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2012-19-04
Wednesday, 04 Apr 2012 12:19 PM
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