Gold tumbles after Fed signals end to easy money

By Jan Harvey

LONDON (Reuters) - Gold prices tumbled to their lowest in more than 2-1/2 years on Thursday, and silver fell more than 6 percent after the U.S. Federal Reserve gave its most explicit signal yet that it plans to bring the era of easy money to an end.

Gold plunged after Fed Chairman Ben Bernanke said on Wednesday the U.S. economy was expanding strongly enough for the central bank to begin slowing the pace of its bond-buying stimulus later this year.

Its fall picked up momentum after it broke through its April low at $1,321 an ounce, a key support level, taking it as low as $1,295.74 an ounce, its weakest since September 2010.

Spot gold was down 4 percent at $1,298.29 an ounce at 0939 GMT, while U.S. gold futures for August delivery were down $74.00 an ounce at $1,300.00.

"Ben Bernanke was certainly indicating an end to quantitative easing, and that's what the market is reacting to," Deutsche Bank analyst Daniel Brebner said.

"We're seeing a stronger U.S. dollar, real rates are looking quite strong, inflation is very low and U.S. 10-year yields are at 2.4 percent. In that environment, gold is going to suffer."

Bonds, shares and commodities fell sharply around the world on Thursday and the dollar rose after Bernanke's comments.

The ultra-loose monetary policy brought in by the Fed to boost U.S. growth, which kept interest rates at rock bottom levels while stoking concerns about inflation, was a major factor fuelling a more than decade-long bull run in gold that took prices to record highs in September 2011.

Indications that the policy was nearing an end have helped push prices down more than 20 percent this year after 12 straight years of gains.

Waning investment interest in gold has been signalled by heavy redemptions from gold-backed exchange-traded funds, whose holdings are down more than 350 tonnes so far this year.

SILVER TUMBLES

Swiss bank UBS early on Thursday cut its gold price forecasts for the next three years to $1,440 from $1,600 for this year, to $1,325 from $1,625 in 2014 and to $1,200 from $1,500 in 2015, citing the Fed's move.

"This creates an increasingly difficult environment for gold," it said. "Slowing Fed asset purchases, with the end now potentially in sight, higher yields, a stronger dollar and continued improvements in the economy are significant obstacles that perpetuate an already very weak investor sentiment."

Silver was the biggest faller among the precious metals, sliding more than 6 percent to a session low at $19.90 an ounce, its weakest since September 2010. The metal was later down 5.8 percent at $20.13 an ounce.

Silver prices are now down by nearly a third this year. The gold/silver ratio, which measures the number of silver ounces needed to buy an ounce of gold, rose to its highest since August 2010 on Thursday at 64.41 as silver underperformed.

Spot platinum was down 1.2 percent at $1,392.99 an ounce, while spot palladium was down 2.4 percent at $677.72 an ounce.

Source: http://news.yahoo.com/gold-tumbles-fed-signals-end-easy-money-102033296.html

how to carve a turkey ipad 2 wal mart happy thanksgiving Macys Thanksgiving Day Parade 2012 Turkey Cooking Times Butterball