Gold fell on Wednesday, largely tracking sharply weaker equity markets after Federal Reserve Chairman Ben Bernanke said that the US economy faces "unusually uncertain" prospects. Wall Street fell more than 1 percent after Bernanke told the US Senate Banking Committee that the central bank was ready to take further steps to bolster growth if needed.
"Even as the Federal Reserve continues prudent planning for the ultimate withdrawal of monetary policy accommodation, we also recognise that the economic outlook remains unusually uncertain," Bernanke said. Spot gold was at $1,185.85 an ounce at 2:43 pm EDT (1843 GMT), against $1,191.40 late in New York on Tuesday. US gold futures for August delivery settled up 10 cents at $1,191.80 an ounce.
Safe-haven demand was largely absent despite Bernanke's comments and a weak Portuguese debt auction in early session that stoked concerns over the fragility of the eurozone banking sector. The SPDR Gold Trust reported a 6.1-tonne fall in holdings, the biggest one-day decline since December which took a toll on investor confidence.
Scott Meyers, senior analyst at Pioneer Futures in New York, said that gold was in a consolidation mode on Wednesday and prices should find support between $1,168-1,175, the upper part of the previous session's trading range. "The market has been trading lower for the better part of July. Yesterday was the first significant reversal that we have seen," Meyers said.
Gold has slipped since reaching a record $1,264.90 an ounce at the end of June, boosted by investment in the metal as a haven from volatility in other markets amid concerns over the economic outlook and eurozone sovereign debt levels. Analysts' outlook for bullion remains broadly positive, however. Respondents to a Reuters poll of 55 analysts, traders and fund managers said they see gold prices posting an eleventh year of gains in 2011 as investors seek refuge from an uncertain global economic outlook.
The poll showed expectations for gold prices in 2011 have risen by nearly 7 percent to a median $1,228 an ounce since a similar survey conducted in January. For 2010, expectations for gold have risen by 4 percent to a median $1,197.00 an ounce. Among other precious metals, silver was at $17.58 an ounce versus $17.65, platinum at $1,514 against $1,512.95 and palladium at $447 versus $449.53.