Bloomberg News

Gold Rises to Two-Month High as Bernanke Says Economy Improving

February 03, 2012

Feb. 2 (Bloomberg) -- Gold rose to a two-month high after Federal Reserve Chairman Ben S. Bernanke said he sees signs the U.S. economy is improving, boosting prospects for commodity demand.

“Indicators of spending, production, and job-market activity have shown some signs of improvement,” Bernanke said today in prepared testimony to the House Budget Committee in Washington. Improving growth prospects will help buoy gold as “deflationary concerns subside,” said Scott Gardner, the chief investment officer at Verdmont Capital SA in Panama.

“When economic news comes in better than expected, it boosts commodities, including gold,” Gardner said in an e-mail.

Gold futures for April delivery gained 0.6 percent to settle at $1,759.30 an ounce at 1:35 p.m. on the Comex in New York, after reaching $1,763.80, the highest since Dec. 2. The metal climbed 11 percent last month, the biggest January rally since 1983.

Gold also got a boost from investors seeking a haven against inflation, after Bernanke cautioned that the U.S. outlook is still “uncertain,” boosting speculation that the Fed will increase stimulus measures to continue the expansion. Last month, the central bank pledged to keep the benchmark U.S. interest rate low until at least late 2014.

“People are speculating that very soon the Fed may talk about quantitative easing,” Sterling Smith, an analyst at Country Hedging in St Paul, Minnesota, said in a telephone interview.

Silver futures for March delivery climbed 1.1 percent to $34.175 an ounce in New York, after touching $34.35, the highest since Nov. 16.

On the New York Mercantile Exchange, platinum futures for April delivery advanced 0.4 percent to $1,629.90 an ounce, climbing for the second straight day. Palladium futures for March delivery rose 1.6 percent to $707.65 an ounce, jumping the most in more than a week.

--Editors: Steve Stroth, Millie Munshi

To contact the reporter for this story: Debarati Roy in New York at droy5@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net


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