MW: Gold futures slump as Bernanke talk lifts dollar
Yellow metal remains up 4.5% this week after rallying to record highs
Gold futures fell on Friday, after hitting new highs in the previous session, as Federal Reserve Chairman Ben Bernanke said loose monetary policy will end eventually.
Friday's shallow move lower did little to reverse this week's gains, with the precious metal remaining up 4.5% so far from last Friday.
Gold for October delivery was last down $6.60, or 0.6%, at $1,048.80 an ounce on the Comex division of the New York Mercantile Exchange. On Thursday, the contract rose as high as $1,060.40 an ounce, the highest ever for a front-month contract.
December gold was down $7.30, or 0.7%, to $1,049.00 an ounce. On Thursday, it reached a record intraday high of $1,062.70.
Thursday's gains came as the dollar gave back ground in currency trading, under renewed pressure as the European Central Bank and the Bank of England made no changes in their respective interest-rate policies.
But on Friday, the dollar firmed after Bernanke said the central bank will tighten monetary policy when the economic outlook shows sufficient improvement. See full story on Bernanke.
The dollar index (DXY 76.48, +0.51, +0.67%) , which measures the U.S. unit against a basket of six major currencies, stood at 76.293, up from 75.917 late Thursday. A stronger dollar tends to pressure the price of gold, reducing its appeal as an alternative investment. See Currencies.
"Commodity prices fell as the dollar gained," said John Stoltzfus, analyst at Ticonderoga Securities, in emailed comments, noting that the price of copper, crude oil and gold all moved lower in early action.
"It's worth noting that the Reuters/Jefferies CRB Index of 19 commodities has rebounded 15% this year as signs of economic recovery emanate from around the world and investors add to their exposure to the asset class," he said.
Also helping gold this week, holdings in the SPDR Gold Trust (GLD 102.81, -0.83, -0.80%) , the biggest exchange-traded fund backed by physical gold, rose to their highest level in three months.
"With investors continuing to allocate funds into the gold market, the next target is likely to be an assault on the psychological $1,100 [an ounce] level," analysts at GoldCore said in a note.
Also in metals trading, December silver futures fell 8 cents, or 0.5%, to $17.73 an ounce. October platinum lost $5.30, or 0.4%, to $1,340.70 an ounce, while December palladium rose $1.70, or 0.5%, to $324.30 an ounce.
December copper dropped 2.84 cents, or 2.1%, to $2.84 a pound.
