Gold rose to the highest in almost two weeks after Federal Reserve Chairman Ben S. Bernanke said accommodative monetary policy is still needed to reduce unemployment.
“Further significant improvements in the unemployment rate” would be supported by continued stimulus policies, Bernanke said in a speech today in Arlington, Virginia. Gold has surged about 90 percent since December 2008 as the Fed held U.S. borrowing costs at a record low and bought $2.3 trillion in housing and government debt during two rounds of so-called quantitative easing.
“The market is reacting to Bernanke’s comments, as it brings the back specter of QE3,” Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago, said in a telephone interview. “If you end up with any type of stimulus, that will benefit all metals.”
Gold futures for April delivery rose 1.1 percent to $1,680 an ounce at 9:38 a.m. on the Comex in New York. Earlier, the metal touched $1,684, the highest since March 13.
Before today, prices dropped 7.3 percent since reaching this year’s peak of $1,792.70 on Feb. 28 amid signs that the U.S. economy is recovering, curbing demand for an alternative investment. Hedge funds and other money managers cut their net- long positions to the lowest since January in the week ended March 20, Commodity Futures Trading Commission data show.
“It could be that some people are reestablishing positions” after Bernanke’s comments, Fred Schoenstein, a trader at Heraeus Precious Metals Management in New York, said in a telephone interview. “People are starting to see that gold may not go down the tubes.”
Prices are still up 6.1 percent this quarter before today. Holdings in bullion-backed exchange-traded products reached a record on March 13.
Silver futures for May delivery rose 1.2 percent to $32.665 an ounce, after touching $32.785, the highest since March 20.
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