Reuters logo
PRECIOUS-Gold edges up 1 pct after plunge on Bernanke
March 1, 2012 / 3:01 AM / 6 years ago

PRECIOUS-Gold edges up 1 pct after plunge on Bernanke

 * Liquidity will remain driver of markets
 * Spot gold may end rebound at $1,726/oz - technicals
 * Coming up: U.S. initial jobless claims, weekly; 1330 GMT

 (Adds details, comments; updates prices)	
 By Rujun Shen	
 SINGAPORE, March 1 (Reuters) - Spot gold rose more
than 1 percent on Thursday, recovering from its biggest fall in
more than three years in the previous session when U.S. Federal
Reserve Chairman Ben Bernanke failed to signal further monetary
easing.	
 Prices moved up rapidly after the Shanghai Gold Exchange
started trading, as investors took advantage of a discount of
about $10 in spot gold to Shanghai prices.	
 Investors have been hoping the Fed will launch another round
of quantitative easing, pushing cheap money into the market that
would boost inflation, against which gold is a traditional
hedge, and give investors additional firepower to buy bullion.	
 But Bernanke stopped short of signaling more asset buying in
an otherwise dovish testimony in front of Congres, driving down
stock markets and boosting the dollar. 	
 While the chances of quantitative easing were reduced, the
Fed will likely adopt some measures to promote growth, said Dong
Tao, chief regional economist for Credit Suisse in Hong Kong.	
 "But liquidity will remain the driver of financial markets
-- this story has not changed, although it will be a fragile
story in the sense that markets will be highly volatile."	
 Spot gold rose 1.4 percent to $1,719.19 an
ounce, rebounding after a 5 percent fall on Wednesday, its
largest one-day loss since November 2008.	
 The Shanghai gold spot deferred contract stood
at 349.30 yuan a gram, or $1,724.32 an ounce.	
 U.S. gold gained 0.6 percent to $1,721.20.	
 Bullion is still up 10 percent this year, on track for its
twelfth annual gain, as interest rates remain low and central
banks boost liquidity.	
 Banks took 530 billion euros of cheap three-year funds from
the European Central bank of Wednesday, bringing to over a
trillion euros the amount of money the bank has injected into
the financial system in two months. 	
 Technical analysis suggested that spot gold's rebound may
end at $1,726 an ounce, said Reuters market analyst Wang Tao.
 	
 	
 	
 BUYING OPPORTUNITY	
 Gold's long-term outlook remains intact despite Bernanke
refraining from indicating further quantitative easing, and a
nearly $100 drop provided a good buying opportunity, traders
said.	
 "It did not sound like a dramatic change, but the market
expectations on the QE were too high and prices needed a good
correction," said a Tokyo-based trader.	
 As long as real interest rates stay low gold will remain
attractive. In January, the Fed pledged to keep interest rates
low until at least 2014, analysts said.	
 Holdings of physical gold in the SPDR Gold Trust, the
world's biggest gold-backed exchange-traded fund, gained 0.7
percent on the day to 1,293.676 tonnes, its highest in two and a
half months. 	
 Other precious metals also staged rebounds. Spot silver
 rose 1.3 percent to $35.04, after shedding more than 6
percent in the previous session.	
 Spot platinum climbed 1 percent to $1,692.74, and
spot palladium rebounded 0.7 percent to $703.25.	
 	
   Precious metals prices 0159 GMT
  Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1719.19   23.95   +1.41      9.94
  Spot Silver        35.04    0.45   +1.30     26.54
  Spot Platinum    1692.74   18.00   +1.07     21.52
  Spot Palladium    703.25    4.78   +0.68      7.78
  COMEX GOLD APR2  1721.20    9.90   +0.58      9.85        20293
  COMEX SILVER MAR2  35.15    0.56   +1.63     25.90           31
  Euro/Dollar       1.3338
  Dollar/Yen         81.11
  COMEX gold and silver contracts show the most active months
 	
 (Editing by Michael Urquhart)	
 	
 

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below