By Pham-Duy Nguyen
To contact the reporters on this story: Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net;
To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net
Gold rose in New York for a second straight day after Federal Reserve Chairman Ben S. Bernanke offered no plan to provide further stimulus for the economy.
While Bernanke said the central bank has the tools to spur growth, he refrained from outlining a plan for a third round of so-called quantitative easing. The Fed pledged on Aug. 9 to keep the benchmark interest rate between zero percent and 0.25 percent through at least 2013 to help stimulate the economy. The next policy meeting is Sept. 20. Gold futures slumped as much as 11 percent in the three days through yesterday, after touching a record $1,917.90 an ounce on Aug. 23.
“The gold camp wanted to hear more about easing and more stimulus, but we just got put on hold until September,” Frank Lesh, a trader at FuturePath Trading LLC in Chicago, said in a telephone interview. “All the problems that drove the price of gold up are still out there. All Bernanke did today was move the decision to a proper time.”
Gold futures for December delivery gained $21.10, or 1.2 percent, to $1,784.30 at 11:10 a.m. on the Comex in New York. Prices are still headed for the first weekly loss in eight weeks.
“Although important problems certainly exist, the growth fundamentals of the United States do not appear to have been permanently altered by the shocks of the past four years,” Bernanke said today in prepared comments at a mountainside symposium in Jackson Hole, Wyoming, hosted by the Kansas City Fed. “It may take some time, but we can reasonably expect to see a return to growth rates and employment levels consistent with those underlying fundamentals.”
Link to Equities
Gold topped $1,800 following the speech as equities extended declines. The Standard & Poor’s 500 Index dropped as much as 2 percent before erasing losses.
“Gold rallies now if stocks head lower,” Adam Klopfenstein, a strategist at MF Global in Chicago, said in a telephone interview. “Stocks are like spoiled kids who want daddy Bernanke to keep bailing them out, but he doesn’t feel the need to step in.”
Gold is in the 11th year of a bull market, the longest winning streak since at least 1920 in London, as investors seek to diversify away from equities and some currencies. Before this week, gold climbed for seven consecutive weeks, the longest rally since April 2007.
Silver futures for December delivery fell 0.3 cent to $40.79 an ounce on the Comex.
Platinum futures for October delivery gained $2.50, or 0.1 percent, to $1,824.90 an ounce on the New York Mercantile Exchange. Palladium futures for December delivery rose 30 cents to $753.50 an ounce on the Nymex.
To contact the reporters on this story: Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net;
To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net