Gold Nears $1,300 After Fed’s Bernanke Backs Sustained Stimulus
FRANKFURT (July 11) Gold climbed to the highest in more than two weeks after Federal Reserve Chairman Ben S. Bernanke backed sustaining economic stimulus. Platinum reached a three-week high and silver headed for the best streak since February.
Bullion fell 23 percent last quarter as Bernanke said after the Fed’s June 18-19 meeting that the central bank may reduce its $85 billion of monthly asset purchases this year. Minutes of that meeting released yesterday showed many officials wanted to see more signs of improving employment before backing a cut in bond buying. Bernanke said yesterday the economy needs “highly accommodative monetary policy for the foreseeable future.”
“The markets needless to say reacted favorably” to Bernanke’s comments, David Govett, head of precious metals at Marex Spectron Group in London, said today in a report. “Sentiment will now be to the upside and the market will be looking for an attempt on $1,300.”
Gold for immediate delivery rose 1.9 percent to $1,283.61 an ounce by 11 a.m. in London. Earlier, it touched $1,298.73 an ounce, the highest since June 24, the last time gold topped $1,300 in intraday trading. The precious metal was poised for a fourth day of gains, the longest winning streak since the five days through April 22.
Gold futures for August delivery climbed 2.8 percent to $1,282 an ounce on the Comex in New York. Futures trading volumes were almost double the average for the past 100 days for this time of day, according to data compiled by Bloomberg.
Bernanke Comments
The U.S. unemployment rate was unchanged at 7.6 percent last month even as the economy added 195,000 jobs, government data show. Gold as much as doubled since 2008 as quantitative easing swelled the Fed’s balance sheet to a record $3.49 trillion.
Bernanke’s comments yesterday, in a response to a question after a speech in Cambridge, Massachusetts, sent the U.S. Dollar Index to the lowest in more than two weeks today. Gold has fallen 23 percent this year as the dollar strengthened 4.1 percent against the six-currency basket. The precious metal is heading for its first annual decline since 2000 as holdings in exchange-traded products slumped to the lowest since 2010.
