Gold tumbles 5% on heavy fund selling on COMEX on Bernanke Testimony - SHARPS PIXLEY
Gold shed 5% this afternoon following the the U.S. Federal Reserve Chairman Ben Bernanke's semi-annual testimony on monetary policy before the House Financial Services Committee this afternoon. In his report he gave no clear indication of further economic measures to stimulate the US economy and the outlook for inflation being "subdued'. The effect on gold was palpable.
In early London trading gold had been trading at $1790 and expected to launch an assault on resistance at $1796 (the November 14 2011 high) as well as the psychologically important $1800 level. The news that the US Federal Reserve may desist from further QE, threw the market into reverse, shedding $84/ounce. The news had a more modest impact on the US dollar index which rallied by approximately 1%.
Bull runs are characterized by retracements such as these and in fact confer greater strength and validity on higher prices in the year to come. What will be most interesting is to see just how quickly gold recovers from this set back as it will be a good test of the resolve of gold bulls. A test of character if you like.
At the time of writing gold is trading at $1723 having recouped $17 of the $85 fall but still very much on the ropes.
Sharps Pixley, London
29 Feb 2012 | Categories: Gold