Gold price takes a dive

The Gold price took a dive today after Federal Reserve Chairman Benjamin Bernanke gave no indication of further monetary easing by the Fed. Bernanke testified before the Joint Economic Committee today. He pressed Congress to pass legislation to avoid the “fiscal cliff” coming at the end of the year, when automatic spending cuts will kick in and tax cuts will expire. “That being said, there’s strong support (for Gold) at the $1,600 level, as generally the market feels that QE3 or more accommodation is just a matter of when and not if,” said Tom Essaye, editor of the 7:00’s Report.

Ratings agency Fitch downgraded Spanish debt to BBB from A today on concerns that the country will need a bailout package to avoid economic disaster. Furthermore, Fitch’s outlook is negative, which means that more downgrades are likely. German Chancellor Angela Merkel reacted by reiterating Germany’s commitment to helping its weaker eurozone partners. “It is important to stress again that we have created the instruments for support in the eurozone and that Germany is ready to use these instruments whenever it may prove necessary,” she said.

At 5 p.m. (EDT), the APMEX Precious Metals spot prices were:

  • Gold, $1,589.70, Down $44.00.
  • Silver, $28.64, Down $0.94.
  • Platinum, $1,441.40, Down $29.80.
  • Palladium, $623.10, Down $9.70.
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Gold price dips as Fed Chairman testifies

The Gold price has taken a tumble in midday trading as Federal Reserve Chairman Ben Bernanke refused to tip his hat regarding any new stimulus package. Bernanke indicated that while the central bank is willing to protect the economy from “worsening,” he did not specify what actions (if any) the Fed would take. “The Gold bulls are desperately hoping for further mention of some form of stimulus from the Fed,” said David Govett of Marex Spectron. “If some form of this is put on the table, then I expect Gold will react very positively. If however, as I personally believe, the Fed leaves things as they are for the time being, this will be viewed as negative and Gold will fall.”

Bernanke’s testimony to the Joint Economic Committee highlighted many of his concerns without much substance on how the central bank might act. Bernanke also warned lawmakers that “a severe tightening of fiscal policy at the beginning of next year that is built into current law — the so-called fiscal cliff — would, if allowed to occur, pose a significant threat to the recovery.” Next up will be the Federal Open Market Committee meeting June 19-20, which is expected to deal with slowing employment growth.

German Chancellor Angela Merkel has said that Germany will use all the tools it has available to support the 17-nation eurozone. “In view of the current difficulties, it’s important to emphasize that we have created the instruments of support in the eurozone, that Germany is ready to work with these instruments whenever that is necessary, and that this is an expression of our firm desire to keep the euro area stable,” the chancellor said.  Merkel, however, has not backed off her rejection of debt sharing or access to euro bailout funds for Spanish banks.

At 1 p.m. (EDT), the APMEX Precious Metals spot prices were:

  • Gold, $1,591.60, Down $40.10.
  • Silver, $28.73, Down $0.85.
  • Platinum, $1,444.20, Down $27.00.
  • Palladium, $625.00, Down $7.80.
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