Gold plunges after hours on Fed meeting minutes

AP News
Posted: Apr 03, 2012 4:21 PM
Gold plunges after hours on Fed meeting minutes

The price of gold plunged Tuesday after the Federal Reserve said inflation appears to be under control.

Gold for April delivery closed around 1:30 p.m. at $1,670 per ounce, down $7.50. Then the Fed released minutes from its March 13 meeting around 2 p.m., and within an hour gold had plunged to about $1,645 per ounce.

Investors often buy gold as a hedge against inflation. But some Fed members are concerned that the economic recovery will be slow and halting, according to the minutes, and that likely means inflation will stay in check.

Inflation "is what gold holders look for more than currency moves and economic recovery," said George Gero, vice president of global futures at RBC Capital Markets.

Copper, an industrial metal, also fell slightly, losing 0.2 cent to $3.919 per pound for May delivery. The decline came despite a government report that factory orders bounced in February as businesses made long-term investments.

Silver, platinum and palladium settled higher. May silver rose 16.7 cents to $33.265 per ounce. July platinum rose $5.60 to $1,660.50 per ounce. June palladium rose 80 cents to $659.60 per ounce.

Silver, platinum, palladium and copper all fell after the Fed minutes were released.

Traders appeared to be weighing reports of strong auto sales in the U.S. against signs that demand in China is cooling. Christine Lagarde, chief of the International Monetary Fund, said Tuesday that the recovery remains particularly frail in Europe.

Oil prices fell as traders digested the mixed signs about the global economy. Benchmark U.S. crude gave up $1.22 to end the day at $104.01 per barrel in New York. Crude has traded near $105 per barrel since February, pushed higher by tension in Iran and the falling dollar. Brent crude was down 57 cents to finish at $124.86 per barrel in London.

In other energy trading, heating oil fell by 2.21 cents to finish at $3.2275 per gallon, and gasoline futures added 1.32 cents to end at $3.3954 per gallon. Natural gas increased by 3.5 cents to finish at $2.187 per 1,000 cubic feet.

In agricultural commodities, wheat and corn rose while soybeans fell. Wheat rose 1 cent to $6.58 per bushel. Corn rose 3.25 cents to $6.5825 per bushel. Soybeans fell 4.25 cents to $14.167 per bushel.