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Gold rises for fourth straight week
Reuters · Saturday, Aug. 28, 2010
Gold trimmed gains yesterday after Federal Reserve chief Ben Bernanke said the Fed was ready to act on growth if needed, but the metal posted a fourth straight week of increase as recent weak economic data boosted its safe-haven appeal.
Bullion has benefited from fears of a double-dip recession as durable-goods orders and home sales data this week pointed to a stalling economic recovery.
"The fact that the economy is not where the Fed wants it to be, and that the Fed is willing to do whatever it needs to spur economic growth, translates into good gains in the stock market," COMEX gold floor trader Mihir Dange said.
Gold gave up some early gains on a Wall Street rally as Mr. Bernanke's comment about Fed readiness fuelled risk appetite, denting gold's appeal as an alternative investment.
Spot gold was last at US$1,235.85 an ounce at 3:14 p.m. ET from US$1,234.94 late in New York on Thursday. U.S. gold futures for December delivery settled up US20¢ at US$1,237.90.
Gold hit a session high of US$1,242.25 an ounce after data showed U.S. growth slowed more sharply than initially thought in the second quarter.
The metal's trend has turned bullish since it hit a low at US$1,160 on July 18, with the Fed having downgraded its economic outlook earlier in August. Gold is on track to rise 5% this month.
Eugen Weinberg, commodities analyst at Commerzbank, said Mr. Bernanke's remarks meant the Fed was ready to use more quantitative-easing tools, raising the possibility of inflation, which would be bullish for gold.
Analysts say further quantitative easing could potentially see gold heading back toward its record high at US$1,264.90 an ounce seen on June 21.
Gold broke out of the relatively narrow range it had kept for much of the summer to hit a two-month high of US$1,244 an ounce on Thursday as investors fretted about the U.S. economy.
Analysts were optimistic toward a recovery in physical demand from major consumers such as India. A Reuters poll showed India's gold imports could rise to 504.5 tonnes this year.
Physical gold demand also tends to rise in August as jewellers stockpile inventory ahead of India's festival season, which starts with Raksha Bandhan on Aug. 24 and extends until Dhanteras in November, the biggest gold-buying day.
more: https://www.nationalpost.com/todays-paper/Gold+rises+fourth+straight+week/3453806/story.html#ixzz0xw1LcL7B