Investing.com - Gold futures plunged lower Wednesday, after Ben Bernanke stated he will adjust the central bank’s balance sheet as needed to assist the economy and the European Central Bank began its massive liquidity injection for 800 euro zone banks.
On the Comex division of the New York Mercantile Exchange, gold futures for April delivery traded at USD1693.25 a troy ounce during late U.S. trade, falling 5.25%.
It earlier rose by as much as 0.35% to trade at USD1,792.95 a troy ounce, the highest since November 14.
Futures were likely to find support at USD1,666.95 a troy ounce,January 23 low and technical resistance at USD1,792.95, today’s high.
Gold prices spiked higher after the ECB allotted a record EUR530 billion in its second offer of unlimited three-year loans earlier in the day, higher than the EUR489 billion allotted in the ECB’s first liquidity operation in late December.
Market expectations for the size of the operation were in a range of EUR200 billion to as high as EUR1 trillion.
Wednesday's offer attracted bids from 800 banks operating in the euro zone, significantly more than the 523 banks participating in December's offer.
Under the operation, banks receive three-year loans in return for collateral at a rate fixed to the ECB's refinance rate of 1%. Together with the first auction, the ECB has now injected EUR1 trillion of 3-year funds into the system.
But the high uptake on the operation sparked concerns that banks in the region expect liquidity pressures to continue throughout the year.
Gold can benefit from such an environment of easy money because of expectations that ample liquidity would put a damper on the value of paper currencies and boost inflation.
However gold started spiraling lower as Bernanke stated that keeping monetary stimulus steady was warranted despite falling jobless claims and rising oil prices potentially increasing inflation.
The Fed Chief added, policy makers believe that “sustaining a highly accommodative stance for monetary policy is consistent with promoting both objectives” of the Fed for stable prices and maximum employment.
Gold prices have rallied nearly 14% since the beginning of 2012, boosted by growing expectations for further monetary easing measures from global central banks.
Also Wednesday, markets showed a muted reaction to a report showing the U.S. economy grew at a faster rate than initially expected in the final three months of 2011.
The U.S. Commerce Department reported that gross domestic product increased at a seasonally adjusted annual rate of 3.0% during the fourth quarter, up from a preliminary estimate of 2.8%.
Elsewhere on the Comex, silver for May delivery gave back 7.22% to trade at USD34.53 a troy ounce, while copper for May delivery dropped 1.28% to trade at USD3.87 a pound.
On the Comex division of the New York Mercantile Exchange, gold futures for April delivery traded at USD1693.25 a troy ounce during late U.S. trade, falling 5.25%.
It earlier rose by as much as 0.35% to trade at USD1,792.95 a troy ounce, the highest since November 14.
Futures were likely to find support at USD1,666.95 a troy ounce,January 23 low and technical resistance at USD1,792.95, today’s high.
Gold prices spiked higher after the ECB allotted a record EUR530 billion in its second offer of unlimited three-year loans earlier in the day, higher than the EUR489 billion allotted in the ECB’s first liquidity operation in late December.
Market expectations for the size of the operation were in a range of EUR200 billion to as high as EUR1 trillion.
Wednesday's offer attracted bids from 800 banks operating in the euro zone, significantly more than the 523 banks participating in December's offer.
Under the operation, banks receive three-year loans in return for collateral at a rate fixed to the ECB's refinance rate of 1%. Together with the first auction, the ECB has now injected EUR1 trillion of 3-year funds into the system.
But the high uptake on the operation sparked concerns that banks in the region expect liquidity pressures to continue throughout the year.
Gold can benefit from such an environment of easy money because of expectations that ample liquidity would put a damper on the value of paper currencies and boost inflation.
However gold started spiraling lower as Bernanke stated that keeping monetary stimulus steady was warranted despite falling jobless claims and rising oil prices potentially increasing inflation.
The Fed Chief added, policy makers believe that “sustaining a highly accommodative stance for monetary policy is consistent with promoting both objectives” of the Fed for stable prices and maximum employment.
Gold prices have rallied nearly 14% since the beginning of 2012, boosted by growing expectations for further monetary easing measures from global central banks.
Also Wednesday, markets showed a muted reaction to a report showing the U.S. economy grew at a faster rate than initially expected in the final three months of 2011.
The U.S. Commerce Department reported that gross domestic product increased at a seasonally adjusted annual rate of 3.0% during the fourth quarter, up from a preliminary estimate of 2.8%.
Elsewhere on the Comex, silver for May delivery gave back 7.22% to trade at USD34.53 a troy ounce, while copper for May delivery dropped 1.28% to trade at USD3.87 a pound.