Gold rises as US Fed backs sustained stimulus

Platinum reached a three-week high and silver headed for the best streak since February. Bullion fell 23% last quarter as Bernanke said after the Federal Reserve June 18 to 19 meeting that the central bank may reduce its $85-billion of monthly asset purchases this year.

Minutes of that meeting released on Wednesday showed that  many officials wanted to see more signs of improving employment before backing a cut in bond buying. Bernanke said on Wednesday that 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. “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% to $1 283.61 an ounce by 11am 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% 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. The US unemployment rate was unchanged at 7.6% 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 US Dollar Index to the lowest in more than two weeks today.

Gold has fallen 23% this year as the dollar strengthened 4.1% 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. Silver for immediate delivery rose 2.9% to $19.9465 an ounce. The metal was poised for a fourth day of gains, the longest run of advances since the four days through February 26.

In New York, futures for delivery in September climbed 3.9% to $19.92 an ounce. Platinum for immediate delivery rose 2.2% to $1 400 an ounce, after climbing to $1 412 an ounce, the highest level since June 20. Palladium added 1.5% to $725.30 an ounce, after rising to $731.67, the highest level since June 17. In New York, platinum for October delivery was at $1 401.20 an ounce and palladium for September delivery was at $724.90 an ounce. – Bloomberg

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