Gold Drops on Fed's Chairman Comments

Gold ticked down on Wednesday trading after comments from the Fed's Chairman came clueless of another round of stimulus.

With the lack of fundamentals from the US and after a wave of sombre data over the past few weeks, the main focus was on Bernake's remarks regarding the world's biggest economy, especially after growing speculations the Fed would introduce a third-round stimulus to beef up recovery that started to lose momentum with the end of the QE2 this month.

After the introduction of QE2 by the Fed, gold along other commodities rose to record high on inflation fears while the dollar slipped to record low against majors, giving another push to dollar-denominated commodities.

Bernanke mentioned that the central bank would keep lose monetary policy to bolster the sluggish growth, yet he expect growth pace to accelerate in the second half of the year.

It seems that there will be no expansion in the quantitative easing measures where the Fed may keep borrowing cost at its ultra-low level for next year to boost growth.

The announcements came negative to gold that may lose demand with the pick up in growth in the second half, as expected by the Fed's chairman. Also, ending the QE2 by the end of the current month is predicted to give some strength to the dollar.

The US dollar rebounded today from one-month low against a basket of major currencies, where the dollar index rose to a high of 73.71 compared with the day's opening level of 73.51.

In the previous session, gold added $0.80 or 0.05% after closing at $1543.90 an ounce, while gold price was setin London at $1545.00 per ounce declining from $1548.40 during the AM fixing.

Spot gold is traded at $1539.70 an ounce after reaching a high of $1546.25 and a low of $1538.15.

Among other precious metals, sliver edged down to $36.58 from the day's opening of $36.81, platinum slipped to $1821.70 from $1824.00 and palladium hovered around $802.20 near the day's starting level, as of 07:15 GMT.