Gold prices fluctuated within a narrow range today after falling hard on Friday following Ben Bernanke’s speech in Boston.
The Fed Chairman said that at the currently anticipated pace of growth the economy would not create enough jobs to significantly slash the unemployment rate, which presently stands at nearly 10%, while the risk of deflation was higher than desirable.
While explicitly supporting the case for more quantitative easing (QE), Bernanke did not offer any details on what the size and scope of the next round of stimulus could be.
Anticipation of further stimulus seems to be fully priced into the equity and commodity markets at the current stage that is still characterised by uncertainty over what steps the Fed is going to take to boost the slowing recovery and when.
Gold is seen as an inflation hedge and an alternative investment to the US dollar, usually moving inversely to the greenback.
Gold stood at US$1,362/oz in late afternoon, while silver and platinum fell to US$24.10/oz and US$1,682/oz respectively.
Major mining stocks were in decline today with the sole exception of gold producer African Barrick Gold (LON:ABG), which managed to add 1%. Peer Randgold Resources (LON:RRS) declined 1.5%, while platinum producer Lonmin (LON:LMI) and silver miner Fresnillo (LON:FRES) dropped 1.6% and 1% respectively.
Gold miner Petropavlovsk (LON:POG) tacked on almost 1%, while other midcaps turned negative with silver producer Hochschild Mining (LON:HOC) sliding 3.5%, while Aquarius Platinum (LON:AQP) declined marginally.
Solomon Islands and Australia operating gold and copper explorer Solomon Gold (LON:SOLG) was among the leading risers in the sector with an 11% gain. Latin America focused gold producer and exploration company Orosur Mining (LON:OMI) followed, advancing 9.5%. South Africa and Mozambique focused gold mining company Pan African Resources (LON:PAF) also did well, climbing 5%.