US GOLD CLOSE – Comex gold bounces on Bernanke testimony, Greek deal hopes
By Tom Jennemann, Correspondent firstname.lastname@example.org 973-204-3383
New York 07/02/2012 – Gold on the Comex division of the New York Mercantile Exchange erased earlier loses and closed sharply higher Tuesday after Fed chief Ben Bernanke said that ultra-low interest rates are warranted given the frustratingly slow pace of economic recovery.
Gold futures for April delivery settled up $23.50, or 1.4 percent, at $1,748.40 an ounce. Trade ranged from $1,712.60 to $1,752.60.
“Bernanke strikes again,” a US-based gold trader quipped. “We’ve made some nice profits over the past year by going long gold immediately before he speaks. Gold loves Ben – even when he says nothing remotely new, like today.”
Echoing last week’s testimony before the House, the Fed chairman called on Washington politicians to cut long-term budget deficits and reiterated that low rates are still needed to boost employment. He also did not specifically rule out the possibility of additional quantitative easing (QE3) even though US non-farm payrolls grew by 243,000 jobs in January against an expected 150,000.
“Some people seem to think that [the Fed] will all of the sudden reverse course after a single data point – like last week’s payroll data – surprises [to the upside]. But [Bernanke] obviously believes that this recovery is going to take many years. One positive report won’t knock him off of his doveish perch,” the trader said.
In Greece, the government remains locked in contentious talks with private sector creditors to restructure its untenable debt load. Similarly, Greece’s deeply divided political class continues to bicker over the austerity measures that are needed to secure the next round of bailout money.
However, the mood did improve during the afternoon hours as rumours circulated that that a breakthrough in Greece may soon be forthcoming. The euro rose nearly two cents to 1.3255 against the US dollar from an intraday low of 1.3087, while the Dow Jones industrial average was last near the day’s high – up 0.32 percent at 12,886.71.
Elsewhere, Iranian lawmakers are considering a plan to stop oil exports to Europe before the EU launches an oil embargo this summer. This news drove light sweet crude (WTI) oil futures for March delivery to close $1.50 higher at $98.41 per barrel.
“We see large option buyers, Iranian saber-rattling and Bernanke as all helping gold,” said George Gero, senior vice president at RBC Capital Markets, who added that the euro should hold steady above $1.32 if a Greek deal is announced tomorrow.
As for the other precious metals, Comex silver for March delivery closed up 44.4 cents at $34.194 an ounce. Trade ranged from $33.155 to $34.370.
Platinum futures for April delivery on the Nymex settled up $25.00 at $1,654.80 an ounce, while the March palladium contract ended at $709.15 an ounce, $3.20 higher.