Gold falls ahead of Bernanke’s statement

Gold fell for a second day on Tuesday on speculation that Feds Quantitative Easing program might be scaled back after the upcoming FOMC meeting. Ben Bernankes statement is in investors focus to shed some light into the central banks future monetary policy direction.

On the Comex division of the New York Mercantile Exchange, gold futures for August delivery fell 0.08% on the day to trade at $1 381.95 per troy ounce. The precious metal ranged between daily high and low at $1 385.35 and $1 376.75 an ounce respectively.

Lachlan Shaw, an analyst at Commonwealth Bank of Australia wrote to Blooomberg: “Gold was mostly lower on expectations that the U.S. Federal Reserve will scale back stimulus measures as economic data continued to lift.”

A possible scale back of Feds monetary stimulus will delivery a blow to gold prices as investors use the metal and other commodities as well as an alternative for wealth preservation, when threatened by inflationary effects. Although inflation in the U.S. is still low and there is generally more room in the economy for monetary easing, slowing down the Quantitative Easing will cause investors to go even more bearish.

Carl Larry, president of Houston-based Oil Outlooks and Opinions said for Reuters: “What I’m expecting is some indication of a slow, measured tapering of the bond-purchase programme by the Fed. In general any decision to taper would signal confidence in the ongoing recovery of the U.S. economy, that is potentially an upside for markets depending on how investors take it.”

Meanwhile, gold prices were also pressured by news that India might introduce even more limitations to gold imports in the country, apart from increasing taxes on inbound gold shipments from 6% to 8% in the beginning of June. The country has been trying to reduce its record current account deficit after physical gold demand surged following the massive drop in prices during April. According to Arvind Mayaram, Economic Affairs Secretary, India could implement more measures to curb imports.

Elsewhere on the precious metals market, platinum and palladium followed golds direction towards the red part of the scale, while silver surged. Platinum futures for July delivery marked a daily loss of 0.18% at 7:57 GMT. The precious metal stood at $1 432.15 per troy ounce, ranging between days high and low at $1 437.85 and $1 425.40 per ounce respectively. Palladium for September delivery fell 1.40% on the day and traded at $707.80 at 7:58 GMT. Silver for July delivery gained 0.11% for the day and stood at $21.780 per troy ounce. It moved between daily high and low at $21.878 and $21.682 an ounce respectively.