Gold prices sank Wednesday as traders weighed the possibility that the Federal Reserve will start paring back its support for the economy in the coming months.
Gold for June delivery fell $10.20 to settle at $1,367.40 an ounce, a drop of 0.7 percent.
Prices for the precious metal wavered earlier in the day. In testimony before Congress, Federal Reserve Chairman Ben Bernanke said it was too soon to taper its bond-buying program. The news helped send gold prices up to $1,411 an ounce in morning trading.
Many investors are convinced the Fed’s pumping money into the financial system will eventually create high inflation. They buy gold hoping that prices for the metal will keep up with other prices when they rise.
Bernanke later explained that the Fed would still consider slowing the pace of its bond purchases in the coming months if the economy improved enough. Gold soon slumped.
Other metals rose slightly Wednesday. Silver for July delivery rose 1.7 cents, or 0.1 percent, to $22.47 an ounce.