Gold drops again after Fed offers few easing hints
Gold dropped nearly 2 percent on June 7 after U.S. Federal Reserve Chairman Ben Bernanke offered few hints of further monetary stimulus, prompting investors to unwind bullish bets on expected easing after last week's dismal U.S. payrolls report, according to a Reuters report.
Bullion was hit particularly hard compared to equities and other commodities, as it has been heavily used by institutional investors to hedge against the economic uncertainties brought by monetary easing. The metal has about halved its gains built on last Friday's jobs data.
Gold has so far this year performed as a fickle indicator to stimulus programs by central banks. It was up 15 percent earlier this year after the Fed said it would keep interest rates near zero for the next several years, but it had only wiped out all yearly gains on disappointment about a lack of monetary easing.
"The market was obviously looking for more conviction, but Bernanke is not willing to commit one way or another," said Anthony Neglia, president of Tower Trading and a COMEX gold options floor trader.
"We hit a major wall not being able to get above $1,650 earlier. If we break below $1,580 convincingly, we are heading $1,500 bound," Neglia said.
Spot gold was down 1.7 percent at $1,589.30 an ounce by 2:38 p.m. EDT ( 1838 GMT), off an earlier high of $1,628.80 an ounce.