Updated from 11:08 a.m. EST with settlement prices
Ben Bernanke's testimony Wednesday to the House Financial Services Committee, a reaffirmation of his comments on Tuesday, didn't lend support to the yellow metal.
The selloff came a day after gold prices popped more than 1.8% due to Bernanke's assertion that the central bank's highly accommodative policy would continue until the economy showed significant and sustained improvement.Gold for April delivery slid $19.80 to $1,595.70 an ounce at the Comex division of the New York Mercantile Exchange. The gold price traded as high as $1,614.40 and as low as $1,592.60 an ounce, while the spot price was dropping $19.70, according to Kitco's gold index. The National Association of Realtors announced that the pending home sales index rose 4.5% in January after falling 1.9% in December. Economists had expected a rise of 1%. "I think what's obvious is that from the testimony yesterday, that Bernanke has an unbridled enthusiasm for printing money," said Jeffrey Sica, president of Sica Wealth Management. "There's not going to be any real serious negotiations on greater spending cuts any time soon, so this government is committed to debt and it's committed to printing money, and both those factors are very positive for gold." The early pullback on Wednesday morning came as some investors jumped out of the yellow metal for some profit-taking, but also as the market continued to display nervousness that Congress may fail to avoid the deep sequestration. These across-the-board spending cuts could take a large bite from United States gross domestic product. Silver prices for May delivery lost 34 cents to $28.99 an ounce, while the U.S. dollar index was falling 0.24% to $81.65. Wednesday marked the first day volume for May silver futures outpaced March futures. Questions loom in Europe, specifically in Italy, where elections failed to decide majority political leadership. The worry among investors is that a new political reality in Italy may cause the country to shy away from its austerity programs. Bernanke faced a second day of questioning from House members, a day after U.S. senators grilled the head central banker about his easing policies and what it means for the health of labor and the economy. "From our perspective, nothing had changed. The underlying fundamental argument for owning gold hasn't changed," Will Rhind, managing director at ETF Securities U.S., said in an interview. "The notion that quantitative easing would stop on the back of, admittedly, better economic data ... but unemployment is still high, economic growth is still weak -- it's getting better but it's still weak -- and so for us quantitative easing it made sense that it would continue in its current form."
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