Gold, Silver Drop Most In Over 2 Months On Bernanke Stimulus Silence

By Lujia Lin,

Bernanke testimony in Congress makes no mention of further easing > Markets had been pricing in some sort of additional stimulus > Gold and silver plummet

Gold and silver posted their biggest intraday drops in over two-and-a-half months as Federal Reserve Chairman Ben Bernanke dampened expectations for further monetary stimulus and pushed the USD higher. As of 18:11 GMT, spot gold was down by 3.32 percent at $1,724.77 and spot silver was down 4.77 percent at $35.14. For both commodities, this was the steepest drop since December 14.

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Charts generated using FXCM Netdania

In his semi-annual testimony before Congress, Bernanke provided no hints as to additional measures that the Fed could undertake to stimulate economic activity in the United States. While maintaining that the situation remains “far from normal,” the Fed chairman noted improvements in terms of unemployment, which fell to a three-year low of 8.3 percent in January. Further adding to the case that the economic recovery is gaining momentum without need for additional stimulus, US GDP growth for the 4 th quarter was revised up to a 3.0 percent annualized rate from 2.8 percent. At the same time, Bernanke added that the Fed’s pledge to keep interest rates low until late 2014 was “conditional” upon econnomic developments.
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Original Article: http://www.dailyfx.com/forex/market_alert/2012/02/29/Gold_Silver_Drop_Most_in_Over_2_Months_on_Bernanke_Stimulus_Silence.html

DailyFX is the forex news and research arm of FXCM (NYSE: FXCM), which provides currency trading and brokerage services and is an advertiser on TheStreet websites. Any opinions, news, research, analyses, prices, or other information is provided as general market commentary, and does not constitute investment advice. Dailyfx will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Currency trading involves significant risk of loss. Individual authors may hold positions in the currencies discussed in the article.