Gold futures held steady near $1,545, while the broader U.S. equity markets relinquished their gains as Fed Chairman Ben Bernanke began his speech

Gold futures held steady near $1,545, while the broader U.S. equity markets relinquished their gains as Fed Chairman Ben Bernanke began his speech on the outlook for the U.S. economy.

The most important aspect of Bernanke’s speech is the final paragraph on monetary policy, in which the Fed Chairman makes no mention of QE3, but does reiterate the need for accommodative policies:

“Although it is moving in the right direction, the economy is still producing at levels well below its potential; consequently, accommodative monetary policies are still needed. Until we see a sustained period of stronger job creation, we cannot consider the recovery to be truly established. At the same time, the longer-run health of the economy requires that the Federal Reserve be vigilant in preserving its hard-won credibility for maintaining price stability. As I have explained, most FOMC participants currently see the recent increase in inflation as transitory and expect inflation to remain subdued in the medium term. Should that forecast prove wrong, however, and particularly if signs were to emerge that inflation was becoming more broadly based or that longer-term inflation expectations were becoming less well anchored, the Committee would respond as necessary. Under all circumstances, our policy actions will be guided by the objectives of supporting the recovery in output and employment while helping ensure that inflation, over time, is at levels consistent with the Federal Reserve’s mandate.”

The full text of Bernanke’s speech is available here:

http://www.federalreserve.gov/newsevents/speech/bernanke20110607a.htm