Investing.com - Gold futures rallied on Monday, trading close to a two-week high as markets interpreted a speech by Federal Reserve Chairman Ben Bernanke as an indication the central bank will maintain its ultra-loose monetary policy.
On the Comex division of the New York Mercantile Exchange, gold futures for June delivery traded at USD1,687.45 a troy ounce during U.S. morning trade, rallying 1.35%.
It earlier rose by as much as 1.45% to trade at USD1,688.75 a troy ounce, the highest since March 13.
Gold futures were likely to find support at USD1,641.95 a troy ounce, last Friday’s low and at USD1,706.15, the high from March 13.
Gold futures spiked higher after Fed Chairman Ben Bernanke said in a speech earlier that further monetary accommodation is needed to bring about big gains in the U.S. jobs market, which he described as “far from normal,” despite a recent improvement.
"Further significant improvements in the unemployment rate will likely require a more-rapid expansion of production and demand from consumers and businesses, a process that can be supported by continued accommodative policies," Bernanke said.
The comments helped fuel speculation that further quantitative easing from the central bank may be coming, weakening the U.S. dollar.
Over the weekend, Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Company, said the Fed is “likely to hint” that it plans to arrange a third round of debt purchases when policy makers meet in April.
Quantitative easing, or major asset purchases by the Fed, keeps interest rates and borrowing costs low, which makes gold more attractive compared with yield- or dividend-bearing assets such as bonds or stocks.
Gold prices have been under pressure in recent weeks as hedge funds and large institutional investors unwound long positions after the Fed gave an upbeat assessment of the U.S. economy earlier in the month, which reduced expectations for a third round of U.S. monetary easing by the central bank.
The euro turned higher against the U.S. dollar following Bernanke’s words, climbing close to a four-week high. Gold remains more sensitive to moves in the euro/dollar exchange rate in the short term than to rising risk aversion, which in the past has been a positive driver of prices.
The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was down 0.32% to trade at 79.27, the lowest since March 9.
Meanwhile, gold traders were also keeping an eye on developments in euro zone amid fears the region’s debt crisis could flare up again after Spain’s ruling People's Party did not secure an outright majority in an election win which could make it harder to push through harsh spending cuts.
Italy’s Prime Minister Mario Monti warned over the weekend that Spain could reignite the euro zone’s debt crisis if it doesn't push ahead with austerity measures.
Chancellor Angela Merkel said earlier that Germany would be prepared to allow running the region’s two bailout funds in parallel, which would give a total fund of EUR700 billion to combat the debt crisis in the single currency bloc.
Elsewhere on the Comex, silver for May delivery jumped 1.45% to trade at USD32.74 a troy ounce, while copper for May delivery surged 1.8% to trade at USD3.877 a pound.
On the Comex division of the New York Mercantile Exchange, gold futures for June delivery traded at USD1,687.45 a troy ounce during U.S. morning trade, rallying 1.35%.
It earlier rose by as much as 1.45% to trade at USD1,688.75 a troy ounce, the highest since March 13.
Gold futures were likely to find support at USD1,641.95 a troy ounce, last Friday’s low and at USD1,706.15, the high from March 13.
Gold futures spiked higher after Fed Chairman Ben Bernanke said in a speech earlier that further monetary accommodation is needed to bring about big gains in the U.S. jobs market, which he described as “far from normal,” despite a recent improvement.
"Further significant improvements in the unemployment rate will likely require a more-rapid expansion of production and demand from consumers and businesses, a process that can be supported by continued accommodative policies," Bernanke said.
The comments helped fuel speculation that further quantitative easing from the central bank may be coming, weakening the U.S. dollar.
Over the weekend, Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Company, said the Fed is “likely to hint” that it plans to arrange a third round of debt purchases when policy makers meet in April.
Quantitative easing, or major asset purchases by the Fed, keeps interest rates and borrowing costs low, which makes gold more attractive compared with yield- or dividend-bearing assets such as bonds or stocks.
Gold prices have been under pressure in recent weeks as hedge funds and large institutional investors unwound long positions after the Fed gave an upbeat assessment of the U.S. economy earlier in the month, which reduced expectations for a third round of U.S. monetary easing by the central bank.
The euro turned higher against the U.S. dollar following Bernanke’s words, climbing close to a four-week high. Gold remains more sensitive to moves in the euro/dollar exchange rate in the short term than to rising risk aversion, which in the past has been a positive driver of prices.
The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was down 0.32% to trade at 79.27, the lowest since March 9.
Meanwhile, gold traders were also keeping an eye on developments in euro zone amid fears the region’s debt crisis could flare up again after Spain’s ruling People's Party did not secure an outright majority in an election win which could make it harder to push through harsh spending cuts.
Italy’s Prime Minister Mario Monti warned over the weekend that Spain could reignite the euro zone’s debt crisis if it doesn't push ahead with austerity measures.
Chancellor Angela Merkel said earlier that Germany would be prepared to allow running the region’s two bailout funds in parallel, which would give a total fund of EUR700 billion to combat the debt crisis in the single currency bloc.
Elsewhere on the Comex, silver for May delivery jumped 1.45% to trade at USD32.74 a troy ounce, while copper for May delivery surged 1.8% to trade at USD3.877 a pound.