Gold Bullion (GOLD)

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Gold Extends Advance on Optimism Fed Will Spur Growth

By Maria Kolesnikova and Glenys Sim
Apr 26, 2012 5:12 AM PT

Gold rose in New York after Federal Reserve Chairman Ben S. Bernanke said he’ll do more to fuel growth if necessary, weakening the dollar and boosting bullion’s appeal as a store of value.

Bernanke said the central bank is ready to add stimulus if needed even after leaving its policy unchanged yesterday and upgrading its view of the economy for 2012. Additional bond- buying is still “very much on the table,” he said. That helped stoke a rally in global stocks and drove the greenback lower. The Fed bought $2.3 trillion of debt in two rounds of so-called quantitative easing from 2008 to June 2011.

“Gold is clearly trading on the dollar,” Copenhagen-based Arne Lohmann Rasmussen, head of rates, foreign-exchange and commodity strategy at Danske Bank A/S (DANSKE), said by e-mail today. “The dollar is under pressure.”

June-delivery bullion rose 0.6 percent to $1,651.60 by 8:11 a.m. on the Comex in New York. Gold for immediate delivery increased 0.5 percent to $1,651.07 an ounce in London.

“Gold regained its footing after Bernanke said the Fed is prepared to do more for the U.S. economy,” said Lynette Tan, an investment analyst at Phillip Futures Ltd.

Bullion, which dropped as much as 1.1 percent yesterday, rose today as the dollar slid for a third day against a six- currency basket including the euro. Holdings of gold in exchange-traded products fell for a third day yesterday to 2,389.8 metric tons, the lowest level since March 23.

Platinum for July delivery, this year’s best-performing precious metal, gained 0.9 percent to $1,560.40 an ounce. Palladium for June delivery rose for the first time in four days, gaining 1.2 percent to $662.95 an ounce. Silver for July delivery advanced 1.5 percent to $30.89 an ounce, the most since April 12.

To contact the reporters on this story: Maria Kolesnikova in London at [e-mail]; Glenys Sim in Singapore at [e-mail]

http://www.bloomberg.com/news/2012-04-26/gold-extends-gains-on-optimism-fed-to-do-more-to-spur-growth.html