Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold fell 1%, closing just above $1,277, and the dollar gained following day one of Ben Bernanke's semi-annual testimony on monetary policy before Congress. Gold initially rallied as high as $1,290 after the Fed Chair, in dovish prepared remarks, said the timing for reductions in quantitative easing is "by no means on a preset course." He added that the Fed is ready "to employ all of its tools, including an increase in the pace of bond purchases," if employment and inflation do not meet "mandated objectives."

The markets took these initial statements to mean the QE taper might be delayed beyond its expectation start in September. However, Bernanke then turned somewhat hawkish, saying the central bank still expects to start reducing bond purchases in September if the data supports it. Traders read his equivocation as a cue to take profits from gold's 6% over the past week, sending the metal lower while the dollar reversed course to gain against most major rivals. QE has supported higher prices for gold and other commodities because it undermines the value of the dollar and increases long-term inflation risk. Silver and platinum tracked gold lower, losing 2.6% and 1%, respectively, while palladium inched slightly lower.

At the Comex close: August fell $12.90 to $1,277.50; September silver lost 52 cents to $19.42; October platinum dropped $14.10 to $1,411; and September futures dipped 15 cents to $735.45 an ounce.