Gold News & Info

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold fell 1.2% as Fed Chair Ben Bernanke concluded his semi-annual report on monetary policy before Congress without indicating a timetable for more easing. In addition, incoming U.S. economic data was mixed for the day, which further clouded the prospect for additional stimulus in the near future. The Fed's Beige Book indicated that more regions of the country are slowing down, with weakness especially in the mid-Atlantic district. On the other hand, new home starts rose 6.9% to the highest level since 2008, a sign that the crucial housing sector may finally be recovering. Treasury prices rose on the lack of easing news, while the Dow posted triple-digit gains behind the good housing report and surprising earnings in the tech sector. The rest of the precious metals complex tracked gold lower, with silver off 0.8%, platinum 1.2%, and palladium 1%.

At the close: August gold fell $18.70 to $1,570.80; September silver dropped 22 cents to $27.10; October platinum lost $16.50 to $1,404.20; and September slid $5.80 to $577.55 an ounce.

While Bernanke refused to offer specific timing for additional easing in today's testimony, he did clarify the criteria that may trigger it and the menu of options the Fed may consider at its next meeting in two weeks. The primary drivers will be deepening unemployment and the threat of deflation. �It�s very important that we see sustained progress in the labor market and avoid deflation risk,� Bernanke said today. �Those are the things we�ll be looking at as the committee meets later this month and later this summer.� The Fed's options include more purchases of Treasurys and mortgage-backed securities (widely known as QE3), extending near-zero interest rates beyond the current target of late 2014, and reopening the so-called "discount window" to provide additional liquidity directly to banks.

Deflation is not much of a concern despite slightly falling core inflation over the past few months. If anything, lower inflation gives the Fed more room to act. Stubbornly high unemployment is the big issue. As Zero Hedge reports, Goldman Sachs believes "the unemployment rate will be the most important determinant of the timing and extent of further Fed easing." The banking behemoth sees an extension of interest rate guidance as the likely step in the near term, with the eventuality of something bigger like QE3 after the presidential election.