* Gold falls with U.S. stocks after Bernanke headlines
* Weak Portuguese debt auction supports prices
* GLD posts biggest one-day decline since December
* Coming up: U.S. June existing home sales on Thursday
(Recasts, adds comments, updates prices to market close, changes
byline, dateline)
By Frank Tang
NEW YORK, July 21 (Reuters) - Gold fell on Wednesday, largely
tracking sharply weaker equity markets after Federal Reserve Chairman
Ben Bernanke said that the U.S. economy faces "unusually uncertain"
prospects.
Wall Street fell more than 1 percent after Bernanke told the U.S.
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
recognize that the economic outlook remains unusually uncertain,"
Bernanke said.
Spot gold <XAU=> was at $1,185.85 an ounce at 2:43 p.m. EDT (1843
GMT), against $1,191.40 late in New York on Tuesday. U.S. gold
futures for August delivery <GCQ0> 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 euro zone banking sector.
The SPDR Gold Trust <GLD> reported a 6.1-tonne fall in holdings,
the biggest one-day decline since December which took a toll on
investor confidence.
The gold market was largely flat in early trade prior to
Bernanke's news, consolidating gains after a bullish reversal on
technical charts in the previous session.
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.
(Graphic: http://link.reuters.com/tyq78m)
Earlier this week, prices fell toward an important bullish
support level, which was seen by technical analysts as a natural
market entry point.
The dollar climbed against the euro, boosted by Bernanke's
comments and the disappointing Portuguese debt auction. Portugal sold
1.25 billion euros in 12-month Treasury bills, but the average yield
more than doubled from the last sale, indicating caution.
[]
The historical negative correlation between gold and the U.S.
currency has reversed since the start of the year as both benefited
from risk aversion.
REUTERS POLL BULLISH
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 euro zone 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.
(Graphic: http://link.reuters.com/req78m)
Among other precious metals, silver <XAG=> was at $17.58 an ounce
versus $17.65, platinum <XPT=> at $1,514 against $1,512.95 and
palladium <XPD=> at $447 versus $449.53.
Prices at 2:35 p.m. EDT (1835 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US gold <GCQ0> 1191.80 0.10 0.0% 8.7%
US silver <SIU0> 17.803 0.110 0.0% 5.7%
US platinum <PLV0> 1529.80 12.00 0.8% 4.0%
US palladium <PAU0> 452.15 1.10 0.2% 10.6%
Gold <XAU=> 1183.35 -8.05 -0.7% 7.9%
Silver <XAG=> 17.58 -0.07 -0.4% 4.4%
Platinum <XPT=> 1512.50 -0.45 0.0% 3.2%
Palladium <XPD=> 447.00 -2.53 -0.6% 10.2%
Gold Fix <XAUFIX=> 1191.50 0.25 0.0% 7.9%
Silver Fix <XAGFIX=> 17.88 33.00 1.9% 5.2%
Platinum Fix <XPTFIX=> 1524.00 15.00 1.0% 4.0%
Palladium Fix <XPDFIX=> 453.00 5.00 1.1% 12.7%
(Additional reporting by Jan Harvey and Pratima Desai in London;
Editing by Sofina Mirza-Reid)
