Gold falls, other precious metals rise

GOLD futures have extended their losses in electronic trading after minutes from the Federal Reserve’s May policy-setting meeting showed board members considered an early end to the central bank’s bond-buying program.

A number of Fed officials could be willing to reduce the pace of bond purchases as early as their next meeting if the economy appears to be on a strong, steady path by then, the minutes showed.

However, the minutes also showed there is little consensus among Fed members on when the economy would be ready for the Fed to begin winding down these supportive measures.

Gold, which settled Wednesday in Comex floor trading down $US10.20, or 0.7 per cent, at $US 1,367.40 a troy ounce, fell further in electronic trading after the Fed minutes were released.

The most actively traded contract, for June delivery, was recently down $US21.40, or 1.6 per cent, at $1,356.20 a troy ounce on the Comex division of the New York Mercantile Exchange.

Gold touched a one-week high of $US1,413.30 after Federal Reserve chairman Ben Bernanke, in remarks to Congress, said the Fed’s bond purchases yielded “significant benefits” to the economy including cushioning the US against deflationary pressures.

But prices swiftly reversed course, falling to a low of $US 1,365.50, after Bernanke said the Fed could also reduce its bond-buying program in its next few policy-making meetings if economic data warrant it.

Gold prices had sold off this year, plunging nearly 19 per cent to lows of $US1,361.10, on fears the Fed would scale back its easy-money program sooner rather than later.

Gold had rallied to record highs on the Fed’s liquidity measures, as many investors worried the program would weaken the US dollar and raise inflation.

“The traders are only focusing on what they think will happen in the next few months,” said George Gero, a senior vice president with RBC Capital Markets Global Futures.

“They were expecting a more dovish statement,” Gero said.

Investors now turn their sights to the Federal Open Market Committee meeting minutes, due out at 2pm EDT. Gold traders will be looking for insight into discussions at the Fed’s May policy-setting meeting.

Settlements (ranges include open-outcry and electronic trading):

London PM Gold Fix: $1,408.50; previous PM $1,360.75

Jun gold $1,367.40, down $10.20; Range $1,353.10-$1,413.30

Jul silver $22.472, up 1.7 cents; Range $22.145-$23.290

Jul platinum $1,469.20, up $10.80; Range $1,458.80-$1,493.50

Jun palladium $752.15, up $40.50; Range $744.00-$755.00