Gold and Silver Decline on Ben Bernanke’s Visit to Congress
On Wednesday, gold (NYSEARCA:GLD) futures for August delivery decreased $12.90 to close at $1,277.50 per ounce, while silver (NYSEARCA:SLV) futures for September declined 52 cents to finish at $19.42.
Both precious metals fluctuated, and ultimately headed lower, as Federal Reserve Chairman Ben Bernanke presented his semiannual monetary report to the House Financial Services Committee. He reiterated the central bank’s stance that bond-purchases might be dialed down this year, though it will depend on incoming economic data.
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Bernanke explained, “I emphasize that, because our asset purchases depend on economic and financial developments, they are by no means on a preset course. On the one hand, if economic conditions were to improve faster than expected, and inflation appeared to be rising decisively back toward our objective, the pace of asset purchases could be reduced somewhat more quickly. On the other hand, if the outlook for employment were to become relatively less favorable, if inflation did not appear to be moving back toward 2 percent, or if financial conditions–which have tightened recently–were judged to be insufficiently accommodative to allow us to attain our mandated objectives, the current pace of purchases could be maintained for longer.”
The Federal Reserve also released its Beige Book, which provides a look at business activity across the nation. The central bank believes the economy grew at a “modest to moderate pace” in June and early July. Many factories showed increases in new orders and production over the past six weeks.
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By the end of the trading day, shares of the SPDR Gold Trust (NYSEARCA:GLD) dropped 1.3 percent, while iShares Silver Trust (NYSEARCA:SLV) fell 3.5 percent. Gold miners (NYSEARCA:GDX), such as Yamana Gold (NYSE:AUY) and Newmont Mining (NYSE:NEM), declined 3.7 percent and 1.5 percent, respectively. Endeavour Silver (NYSE:EXK) shares decreased 3.9 percent.
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Disclosure: Long EXK, AG, HL, PHYS