Bloomberg News

Gold Extends Slump on Signs Fed Won’t Expand Stimulus

March 13, 2012

Gold fell to the lowest price since January after Federal Reserve policy makers raised their assessment of the economy, signaling that monetary stimulus won’t be expanded.

Gold for immediate delivery fell 1.8 percent to $1,670.15 an ounce at 3:53 p.m. New York time, after slipping as much as 2.2 percent to $1,666.13, the lowest since Jan. 25.

The Federal Open Market Committee said in a statement that the labor market was improving. The dollar climbed against a basket of major currencies, eroding the investment appeal of gold. On Feb. 29, the spot price of the metal plunged 4.9 percent, the most since December 2008, after Fed Chairman Ben S. Bernanke damped speculation that the central bank would take new steps to bolster liquidity.

“This is a big disappointment for gold investors who are anticipating additional stimulus,” Phil Streible, a commodity broker at RJO Futures in Chicago, said in a telephone interview after the Fed statement at 2:15 p.m. “People are still favoring the dollar.”

Gold futures for April delivery dropped 0.3 percent to settle at $1,694.20 an ounce at 1:50 p.m. on the Comex in New York. In electronic trading after the close, the most-active contract fell as much as 2.2 percent to $1,662.10, also the lowest since Jan. 25.

Silver futures for May delivery rose 0.5 percent to close at $33.581 an ounce on the Comex.

On the New York Mercantile Exchange, platinum futures for April delivery gained 0.4 percent to settle at $1,701.80 an ounce. Palladium futures for June delivery climbed 0.7 percent at $708.85 an ounce.

To contact the reporter on this story: Yi Tian in New York at ytian8@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net


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