Gold, Silver Prices Bust on Bernanke

The Street, Alix Steel

Gold and silver prices were falling Wednesday as investors digested Ben Bernanke's commitment to low interest rates but no additional stimulus.

Gold for August delivery was down $7 to $1,537 at the Comex division of the New York Mercantile Exchange. The gold price has traded as high as $1,547.40 and as low as $1,531.80 while the spot gold price was shedding more than $10, according to Kitco's gold index.

Silver prices were slipping $0.72 to $36.32 an ounce while the U.S. dollar index was adding 0.40% to $73.84.

Federal Reserve chairman Ben Bernanke appeared to take the prospect of more stimulus, or a third round of quantitative easing, off the table Tuesday when he spoke at the International Monetary Conference in Atlanta. Bernanke acknowledged that slower economic growth is painful, but that recovery could pick up steam in the second half of the year.

Bernanke gave no hints of tightening, but said that "accommodative monetary policies are still needed. . .until we see a sustained period of stronger job creation, we cannot consider the recovery to be truly established."

Bernanke's speech was a mixed bag for gold prices. On the one hand the promise of low rates for an extended period of time means that inflation will continue to outpace interest rates, a positive for gold prices. On the other hand, no more stimulus helps the U.S. dollar while curbing inflation worries and demand for gold as a safe haven asset.

All markets are generally lower Wednesday, so gold could also be suffering from profit taking as well as the buy the rumor, sell the news problem. Gold had rallied modestly this week and last but sold off into Ben Bernanke's speech and are extending those losses.