Gold falls after Fed offers no new economic steps
Updated: Thursday, May 24, 2012 1:49 PM
By SANDY SHORE
Gold prices dropped slightly Wednesday after the Federal Reserve held off on new measures to stimulate economic growth.
The Fed predicted that economic growth would improve gradually. The central bank maintained its plan to keep a key short-term interest rate near zero through late 2014 but offered no hint that it would make more bond purchases after its current program ends in June.
Gold for June delivery fell $1.50 to finish at $1,642.30 an ounce.
Gold prices have been supported for months in part by the Fed's bond-buying programs. The bank bought Treasury bonds and mortgage-backed securities to push down long-term interest rates and stimulate borrowing and spending.
By keeping interest rates low, the Fed's programs pressured the dollar, which weakened against other currencies. Gold and other commodities are priced in dollars, so a weaker dollar makes them more of a bargain for traders who use other currencies.
Without additional bond-buying programs, gold likely will remain under some light pressure, said Dave Meger, vice president of metals trading at Vision Financial Markets. Investors may opt to put more money into other assets such as stocks and bonds.
Other metals were mixed. May silver fell 39 cents to end at $30.356 per ounce, May copper rose 2.75 cents to $3.70 per pound, July platinum fell 80 cents to $1,547.30 an ounce and June palladium declined $10.70 to $655.10 per ounce.
Soybean prices hovered at levels not seen since July 2008 on expectations that global supplies will remain tight while demand is strong, particularly in China.
The long-term outlook has drawn more money into soybean contracts. Traders are expecting the price will continue to climb, Telvent DTN analyst Darin Newsom said.
In July contracts, soybeans rose 11 cents to end at $14.76 per bushel, wheat fell 6 cents to $6.265 per bushel and corn dropped 7 cents to $6.01 per bushel.
Oil prices rose 57 cents to finish at $104.12 per barrel on the New York Mercantile Exchange. Heating oil increased 3.16 cents to $3.1611 per gallon, gasoline futures fell 0.36 cent to $3.1557 per gallon and natural gas jumped 9.3 cents, or 4.7 percent, to $2.068 per 1,000 cubic feet.
Copyright 2012 The Associated Press.