Gold gains as Bernanke reassures market tightening not on horizon
Published Jul 18, 2013 01:45PM ET
Gold and the dollar tend to trade inversely with one another, especially in times of loose monetary policies.
On the Comex division of the New York Mercantile Exchange, gold futures for August delivery were up 0.52% at USD1,284.15 a troy ounce in U.S. trading on Thursday, up from a session low of USD1,273.35 and down from a high of USD1,287.55 a troy ounce.
Gold futures were likely to find support at USD1,269.45 a troy ounce, Wednesday's low, and resistance at USD1,299.45, Wednesday's high.
Bernanke told U.S. lawmakers in his semi-annual congressional testimony earlier that stimulus programs will remain in place for the foreseeable future though they may begin to wind down later this year if the economy improves.
Stimulus programs such as the Fed's USD85 billion monthly asset-purchasing program tend to weaken the dollar to spur recovery, making gold an attractive hedge.
Bernanke stressed that an end to such stimulus programs will not herald the arrival of tighter monetary policy, adding that benchmark lending rates may remain at rock-bottom levels even if the unemployment rate approaches 6.5%, a level the U.S. central bank has said it would like to see.
Better-than-expected news out of the labor market capped gold's gains by confirming sentiments that stimulus programs will end some time.
The U.S. Department of Labor reported earlier that the number of individuals filing for initial jobless benefits last week fell by 24,000 to 334,000, compared to expectations for a drop of 13,000 to 345,000, which sent the dollar rising.
Elsewhere, the Federal Reserve Bank of Philadelphia said that its manufacturing index rose 19.8 for July from June’s 12.5 reading. Analysts had expected the index to decline to 7.8.
Elsewhere on the Comex, silver for September delivery was up 0.04% at USD19.428 a troy ounce, while copper for September delivery was up 0.18% and trading at USD3.134 a pound.
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Written By: Investing.com
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