Gold slips after Bernanke hints at slowing bond purchasesREUTERS, Thu. May 23, 2013 07:55 WIB - Gold fell for a third straight session on Thursday after U.S. Federal Reserve Chairman...
Spot gold dropped 0.3 percent to $1,363.96 an ounce by 0018 GMT, holding near a two-year low of $1,321.35 reached in April.
The metal hit a one-week high of $1,414.25 on Wednesday after Bernanke told Congress that the U.S. economy needs further traction before it scales back monetary stimulus. But the price slipped after he said a decision to cut back may come at one of the central bank's "next few meetings" if the economy looked set to maintain momentum.
U.S. gold futures also fell 0.3 percent to $1.362.90 an ounce.
Premiums for gold bars hit a record high in Asia on Wednesday as lower spot prices lured more buyers, mainly in China, the world's second biggest consumer of the precious metal, amid tight physical supplies.
Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.3 percent to 1,020.07 tonnes on Wednesday, the lowest in more than four years.
Spot silver rose slightly after a two-day fall, while platinum and palladium tracked gold lower.
Wall Street falters in volatile session on Fed worriesREUTERS, Thu. May 23, 2013 07:33 WIB - Stocks fell on Wednesday with the S&P 500 posting its biggest decline in three...
Trading was volatile - the Dow and the S&P indexes both rose more than 1 percent during the morning, but fell more than 1 percent in the afternoon.
The minutes followed comments from Chairman Ben Bernanke, who said the Fed could decide to scale back the pace of bond purchases at one of the "next few meetings" if the economic recovery looked set to maintain forward momentum.
The comments were a blow to a market that had accelerated after Bernanke said the central bank needed to see further signs of traction in the economy before it tapered stimulus.
"This is a very sensitive market and particularly sensitive to any notion that tapering will come too soon," said Quincy Krosby, market strategist at Prudential Financial in New York.
"No one wants to be selling if the data reaches the point when the Fed begins to specifically talk about tapering. The market doesn't wait for the Fed to move. It will move before. That's how it operates."
Krosby also added that Bernanke went off-script and in his effort to be transparent, "he confused the market."
According to the minutes of the April 30-May 1 policy meeting released on Wednesday, "a number" of officials were open to tapering large-scale asset purchases as early as the June meeting, but disagreement continued on what conditions would suffice to begin that move.
One official preferred to begin decreasing purchases immediately and another wanted to add more accommodation immediately, but ultimately most felt it was important simply to be prepared to adjust the pace up or down in response to incoming data.
Investors have increasingly turned their attention to when the Fed's current $85 billion-per-month bond purchase program might end or slow. The stimulus has been a major force behind a rally in U.S. equities that has helped the S&P 500 and Dow industrials gain about 16-17 percent so far this year.
The Dow Jones industrial average was down 80.41 points, or 0.52 percent, at 15,307.17. The Standard & Poor's 500 Index was down 13.81 points, or 0.83 percent, at 1,655.35. The Nasdaq Composite Index was down 38.82 points, or 1.11 percent, at 3,463.30.
The S&P 500 rose as high as 1,687.18 and fell as low as 1,648.86 during Wednesday's trading session while the Dow rose as high as 15,542.40 and fell as low as 15,265.96.
"You have more volatility than you've had for a long time," said Uri Landesman, president, Platinum Partners in New York.
"The technician in me looks at a rocket shot straight up and says you could get a pretty good correction here without that much work. There aren't really solid levels of support on the way down because we broke through all of them so quickly."
All 10 sectors on the S&P 500 closed negative, with energy and utilities leading the decline. The energy sector index fell 1.2 percent while the utilities sector fell 1.6 percent.
After the market close, shares of Hewlett-Packard Co jumped 10 percent after the world's largest personal computer maker raised the lower end of its full-year outlook. The stock had closed up 0.6 percent at $21.23.
Bristol-Myers Squibb shares rose 5.3 percent at $46.40 after a Citi note highlighted excitement surrounding so-called immunotherapy, in the wake of positive results from clinical trials conducted by companies such as Bristol-Myers and Roche Holding .
Target Corp cited unseasonably cold weather as it reported a 0.6 percent decline in first-quarter sales at U.S. stores open at least a year. Target cut its full-year profit forecast and shares slid 4 percent to $68.40.
Toll Brothers shares rose 2.9 percent to $37.07 after the largest U.S. luxury homebuilder posted a 46 percent rise in quarterly profit, suggesting the housing recovery is picking up pace across the industry.
Volume was roughly 8.34 billion shares on the New York Stock Exchange, the Nasdaq and the NYSE MKT, exceeding the year-to-date average daily closing volume of about 6.4 billion.
Decliners outnumbered advancers on the NYSE by 2,362 to 648, while on the Nasdaq, decliners beat advancers 1,870 to 632.
FOREX-Dollar stands tall after Bernanke comments; China PMI in focusREUTERS, Thu. May 23, 2013 06:56 WIB - The dollar hovered at a near three-year high against a basket of major currencies in...
The dollar index stood at 84.381 after gaining more than 0.5 percent on Wednesday to reach a peak of 84.422, a high not seen since July 2010. Against the yen, it rose 0.1 percent to 103.23, within reach of a 4-1/2 year high of 103.74 set overnight.
The move came after Fed chief Ben Bernanke, in testimony to Congress, said that if economic improvement continued, the Fed could "in the next few meetings take a step down" in its purchases and warned that holding interest rates too low for too long has its risks.
But Bernanke said that any decision to ease up on bond purchases would not mean the Fed would automatically push for a complete roll back of the stimulus.
"Rather we would be looking beyond that to see how the economy evolves and we could either raise or lower our pace of purchases going forward," he said.
Still, dollar bulls cheered, bidding the greenback up across the board. As a result, the euro skidded to $1.2834 from a high near $1.3000 on Wednesday. It was last 0.2 percent lower at $1.2839, not far from this month's nadir of $1.2796 set last week.
The greenback's rise was even more dramatic against commodity currencies. The Australian dollar, which fell more than 1 percent in the previous session, was down a further 0.3 percent at a fresh one-year low of $0.9656. It was moving ever closer to its 2012 trough of $0.9581.
Treasury bonds beat a hasty retreat, driving the benchmark 10-year yield above the key 2 percent level for the first time in two months.
Markets also ignored the fact that Bernanke set the bar high for any scale-back of the Fed's bond purchases, leading some analysts to question the sustainability of the dollar's rise.
"We think tapering expectations will ultimately be undermined by deterioration in U.S. activity in the weeks ahead," said Daniel Katzive, strategist at BNP Paribas.
"However, the U.S. calendar is quiet now until the week after next, when key monthly releases such as ISM and the May employment report arrive."
Another standout currency overnight was the Swiss Franc, which came under pressure after the country's central bank chief did not rule out negative interest rates and said policymakers could adjust the currency cap if necessary.
That saw the euro rise as far as 1.2650 francs, its highest since May 2011.
In Asia, the focus will be on HSBC's early report on China's manufacturing sector. In April, the survey showed growth in the factory sector had eased as new export orders fell, putting at risk a recovery in the world's second biggest economy.
Any disappointment could heap more pressure on commodity currencies like the Australian dollar, traders said.
Gold Erases Gains After Fed Bernanke CommentsREUTERS, Thu. May 23, 2013 01:30 WIB - Gold settled lower on Wednesday, giving up earlier gains after U.S. Federal Reserve...
Spot gold had briefly broken above $1,400 to a one-week high of $1,414.25 an ounce after Bernanke said the Fed needed to see further signs the economy was gaining traction before removing current measures.
But it failed to hold onto those gains and was last 1.1 percent lower on the day at $1,361 an ounce after he also emphasized that inflation continued to run below the bank's target.
Gold is usually seen as an hedge against inflationary pressures, which remain low in major markets at the moment, despite accommodative measures.
"The Fed has been buying bonds since the beginning of the year and gold hasn't done much, and if you look across the world, we are indeed seeing monetary easing, but inflation expectations are dropping," Credit Suisse commodity analyst Karim Cherif said.
The dollar traded at a fresh 4-1/2-year high against the yen and a new nine-month high against the Swiss franc after Bernanke's speech. European and U.S. shares retained gains from earlier in the day.
U.S. gold futures settled $10.20 lower at $1,367.40 an ounce.
Physical demand remained strong in China, but buying in India, the world's top gold consumer, has been slowing as its central bank tries to rein in a trade deficit by cutting gold and silver imports.
As a gauge of investor interest, holdings of New York's SPDR Gold Trust, the largest gold-backed exchange-traded-fund, fell 0.8 percent on Tuesday to 1,023.08 tonnes, the lowest in more than four years.
Spot silver was last flat at $22 an ounce, regaining ground after dropping to 2-1/2-year lows earlier in the week.
Platinum rose 0.2 percent to $1,459 an ounce as supply concerns in South Africa continued and palladium was flat at $744 an ounce.
Gold Firms as Fed Officials Play Down Stimulus HaltREUTERS, Wed. May 22, 2013 08:58 WIB - Gold edged higher on Wednesday, buoyed by a weaker dollar after Federal Reserve...
Spot gold rose 0.3 percent to $1,379.56 an ounce by 0108 GMT, but remains not far off a two-year low. Spot silver gained 1 percent to $22.61 an ounce, regaining more ground after dropping to 2-1/2-year lows earlier this week.
U.S. gold was little changed at $1,378.80 an ounce.
Gold has been pressured in recent weeks by fears the Federal Reserve could scale back or halt its monthly $85 billion bond purchases that have buoyed bullion's appeal as a hedge against inflation.
But New York Fed President William Dudley and St. Louis Fed chief James Bullard, who will both vote at the June 18-19 meeting, made clear further economic progress was needed before they would support curtailing bond purchases.
Investors are eyeing Fed Chairman Ben Bernanke's testimony in Congress about the state of the U.S. economy later in the day for clues to his stance on ending the monetary stimulus this year. The Federal Open Market Committee also releases the minutes of its April 30-May 1 meeting.
Gold's recent slump could have much further to run, with a breach of its April low of $1,321.35 potentially setting up bigger losses towards levels not seen since mid-2010, according to chart analysts.
The Bank of Japan may front-load bond purchases or offer funds via market operations more frequently if bond market turbulence persists, hoping it can prevent a renewed spike in yields by fine-tuning market operations.
Holdings of the largest gold-backed exchange-traded-fund, New York's SPDR Gold Trust fell 0.8 percent on Tuesday to 1,023.08 tonnes, the lowest in more than four years.