Shares of gold mining companies fell Thursday, following gold prices lower after Federal Reserve Chairman Ben Bernanke offered no signal of imminent action to help the U.S. economy.
Bernanke told a congressional panel that the Federal Reserve is prepared to take further steps to lift the economy if it weakens. But he said that he expects economic growth to continue at a moderate pace this year, and didn't indicate that the Fed would make any immediate move to support the economy, as many commodities traders had hoped he would.
In the past, the Fed's stimulus measures, meant to push down long-term interest rates and stimulate borrowing and spending, had supported the price of gold. Lower interest rates can drive down the value of the dollar. Gold is priced in dollars, so a weaker currency makes it more of a bargain for traders who use other currencies.
Lower rates also raise fears for some investors of inflation down the road, and they buy up gold because they think it will hold its value better than other assets if the dollar weakens.
The value of gold had been falling from late February through mid-May, but has spiked since then as worries about the global economy grew and investors sought holdings they consider safer.
On Thursday, gold prices dropped nearly 3 percent, finishing at $1,588 per ounce. The sharp drop caused share prices to fall for companies that mine gold. Over the long term, lower prices for the metal could mean lower revenue for the miners.
In afternoon trading, shares of Barrick Gold Corp. fell $1.67, or 4.1 percent, to $38.78; Newmont Mining Corp. dropped 88 cents, or 1.7 percent, to $50.83; Goldcorp Inc. decreased $1.05, or 2.6 percent, to $39.19; Yamana Gold Inc. fell 32 cents, or 2 percent, to $15.76 and Kinross Gold Corp. dropped 52 cents, or 6 percent, to $8.10.