Gold Doesn’t Get A Bernanke Boost

Published on Thursday, 07 June 2012 18:24 Written by Todd Shriber

As is par for the course, gold got little help from Federal Reserve Chairman Ben Bernanke as the central bank chief offered no credible verbiage that more quantitative easing is imminent. That means bad news for gold as COMEX gold for August delivery slid $46.20 to settle at $1,588.00 an ounce. That’s the first settlement below $1,600 for the yellow metal in a week. Following Wednesday’s beating, the U.S. dollar regained some ground today as the PowerShares DB US Dollar Index Bullish (NYSE: UUP) closed modestly higher.

Simply put, Bernanke’s congressional testimony today was a buzz-kill for gold bugs. Over the past couple of days, traders bid up riskier assets, including precious metals, with the expectation that Bernanke would finally get around to saying beyond a shadow of a doubt that more quantitative easing is imminent.

While Bernanke did say the central bank stands ready to act and has the ammunition to do so, that’s broken record stuff. Gold bugs have heard it all before and now Bernanke has once again dealt a significant blow to gold’s near-term fortunes. On heavy volume, the iShares Gold Trust (NYSE: IAU) slid 1.8% while the SPDR Gold Shares (NYSE: GLD) slid 1.7%. With gold back below $1,600 an ounce; the $1,550 area could be next support.

Predictably, Bernanke’s comments, or lack thereof, punished the other metals as well. Silver was taken to the woodshed as the iShares Silver Trust (NYSE: SLV) plunged 2.5% on heavy turnover. Economic data was decent today as initial claims for jobless benefits fell by 12,000 to 377,000 last week. The reading was inline with what economists were expecting.

That lone data point was certainly not enough to lift silver and it definitely wasn’t enough to help the other white metals. The ETFS Physical Platinum Shares (NYSE: PPLT) gave up 1.5% on heavy turnover while the ETFS Physical Palladium Shares (NYSE: PALL) lost almost 1% on volume that was just a third of the daily average.

No help from Bernanke meant the worst day in a couple of weeks for the miners. The Global X Silver Miners ETF (NYSE: SIL) gave up 2.5% on volume that was slightly above average. On nearly double the average daily volume, the Market Vectors Gold Miners ETF (NYSE: GDX) plunged 3.4%. Taking a break from what had been impressive run over the past seven or trading days, the Market Vectors Junior Gold Miners ETF (NYSE: GDXJ) slipped 3.6%. A combination of these funds being near-term overbought and Bernanke giving sellers an excuse to sell led to the Thursday carnage.