By The Associated Press
Gold prices held steady Thursday, after plunging Wednesday on signs the Federal Reserve could back away from its bond-buying stimulus program.
Gold for April delivery was virtually flat, rising 60 cents to $1,578.60 per ounce. May silver rose slightly, up 8 cents to $28.761 per ounce.
Gold dropped Wednesday after the Fed hinted that some of its members are doubtful about continuing the central bank's bond purchases. If the Fed were to end its bond-buying program, that would make gold less attractive to many investors.The Fed's bond purchases are meant to spur the economy, but they can also cause inflation. That pushes some investors into gold, because they view the precious metal as a hedge against inflation. Adrian Day, of Adrian Day Asset Management in Annapolis, Md., said some of his clients have been asking if they should sell gold. The metal's price has been declining since early October, and news that some prominent hedge funds are cutting their gold holdings has also spooked some investors. Day said it's too early. The U.S. economy is hardly improving at a rate strong enough to convince the Fed to abandon its bond buying, he said. Hedge funds, he added, just "tend to jump on trends." Day has told clients that gold would be a sound investment for the long term. "This is a painful period for holders of gold stocks," he wrote, "but we have been here before and come through it." Prices for industrial metals and oil, which tend to mirror how traders feel about economic growth, were down. May copper fell 1.5 percent, down 5.55 cents to $3.5695 per pound. April platinum lost 1.6 percent, down $27.10 to $1,620 per ounce. March palladium fell $2.80 to $733.60 per ounce. U.S. benchmark crude oil fell $2.38, or 2.5 percent, to $92.84 per barrel in New York, the second drop of 2 percent in two days. Prices were pushed down by a government report that showed the U.S. had more crude supplies than analysts expected.