Gold Up in Wake of Bernanke Speech
Source: Kitco, Allen Sykora (8/27/10)
"Gold ticks higher after Bernanke's remarks about the economy. . ."
"With Bernanke suggesting he is prepared to do just about anything to support the economic recovery, commodities in general have been strong," said one bank trader.
At 11:35 a.m. EDT (1535 GMT), December gold was up $5.10 to $1,242.80 an ounce on the Comex division of the New York Mercantile Exchange. Spot gold was $4.10 higher at $1,240.40 an ounce.
Gold initially backed down from modestly higher levels to steady after the release of Bernanke's prepared remarks. The Fed chief conceded that the recovery has slowed but nevertheless indicated he still looks for growth.
This might have temporarily cooled some of the recent uncertainty about the economy that prompted some safe-haven buying, observers said.
Some of the movement at the time may have been traders simply exiting short-term positions prior to a late-summer weekend. "Some say since gold is up for the week, let's take a little profit," said Leonard Kaplan, president of Prospector Asset Management.
But gold eventually moved higher again as the dollar softened against the euro since Bernanke said the Fed still has tools it can use to jump-start economic growth, if needed, and head off any deflation. This meant prospects for low interest rates for a longer period of time, undermining the dollar and thereby boosting gold due to the inverse relationship of the two, said a trader.
Kaplan put technical support for December gold at $1,210 and resistance at $1,260.