Gold climbs more than 2 week high on Fed stimulus hopes

SYDNEY-AUSTRLIA (July 12) Reuters reported that gold jumped to its highest level in more than two weeks after Mr Ben Bernanke chairman of Federal Reserve said the US central bank would continue its accommodative monetary policy for now to support the economy.

As per report, that marks bullion's fourth day of gains in its longest winning streak since mid April, pushing prices of other precious metals and US gold futures to multi week highs.

Gold, which is still down about 25% this year had taken a beating after Bernanke said in May and June that the Fed could begin tapering its bond purchases later this year. But comments from him on Wednesday suggested that stimulus could last longer, supporting prices of gold as it is typically seen as a hedge against inflation.

Mr Amber MacKinnon an analyst at Nomura Securities in Sydney said that “Mr Bernanke was quite dovish in his comments. Maybe we won't see a pullback in quantitative easing as quickly as we anticipated. We are likely to see a short term rally in gold up to around USD 1,400 and then a fall back to current levels."

Spot gold had risen 2% to USD 1,289.49 an ounce by 0638 GMT. It earlier climbed 2.7% to USD 1,298.36 its highest since June 24. Comex gold jumped as much as 4 percent to a two and a half week high of USD 1,297.2. Spot silver climbed 4.8% to USD 20.26 its highest in three weeks.

Mr Wang Tao technical analyst of Reuters said that “Spot gold may break a resistance zone of USD 1,294 to USD 1,302 per ounce and rise more to USD 1,331.”