Gold Settles Higher at $1,280 on Dovish Fed Signals
NEW YORK (July 11) Gold rose to a near three-week high on Thursday, within striking distance to $1,300 an ounce, as investors flocked to the bullion market as a hedge after U.S. Federal Reserve Chairman Ben Bernanke reasserted that accommodative monetary stimulus will stay for some time.
Bullion extended its winning streak to a fourth straight day after Bernanke on Wednesday told an economic conference in Cambridge, Massachusetts that a "highly accommodative policy is needed for the foreseeable future."
Bernanke's comment, which sparked a Wall Street rally and losses in the dollar, came after minutes of the Fed's June meeting showed many officials wanted more reassurance the job market was on solid ground before withdrawing economic stimulus.
Commodities Tomorrow: Gold Reached 1-Week High
CNBC's Bertha Coombs discusses the day's activity in the commodities markets and looks at where oil and precious metals are likely headed tomorrow.
"Investors prefer to focus on the probability that the Fed will remain easier for far longer," said Edward Meir, metals analyst at INTL FCStone.
Prior to Wednesday, economists had expected the U.S. central bank might begin to scale back its $85 billion in monthly bond purchases in September.
Spot gold climbed as much as 2.7 percent to $1,298.36, its highest since June 24. It was last traded up 1.4 percent to $1,281.40 an ounce.
U.S. gold futures settled up $32.50 at $1,279.90, with trading volume at 225,000 lots, above 10 percent above its 30-day average, preliminary Reuters data showed.
Gold is still down 23 percent this year after taking a beating following Bernanke's comments in May and June that the Fed could begin scaling down its bond purchases later this year.
