Gold Drops as Market Digests Bernanke Tapering Remarks

Gold prices fell to their lowest level in more than 2 ½ years Thursday as markets continued to digest remarks from Federal Reserve Chairman Ben Bernanke, leaving analysts and traders looking for at least a short-term bounce, but also fearing future weakness may be in store.

Technically oriented selling accelerated the decline as prices fell through key chart levels that triggered stop-loss selling.

The move was fueled as traders reacted to remarks from Bernanke Wednesday suggesting that the Federal Reserve may be able to start tapering its asset purchases, known as quantitative easing, sometime this year and potentially could end them by the middle of next year, assuming the U.S. economy continues to improve, analysts said. The Fed chairman emphasized more than once that any actual steps would hinge on future economic data, but markets nevertheless zeroed in on the potential for tapering.

“Investor sentiment seems to believe QE (third round of quantitative easing) is coming off of the table,” said Sean Lusk, director of commercial hedging with Walsh Trading. “Investors are taking profits.”

via Kitco News

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