Gold Gains After Remarks from Bernanke

July 16, 2013 PJ Moore Economic Barometer

Hedge funds continued to pour money into gold for the second straight week as Federal Reserve Chairman Ben S. Bernanke quashed expectations of a tapering of stimulus soon.  Futures had their steepest rise since 2011.

Investors added to their net-long position by 4.1 percent to 35,691 futures and options, data for July 9 shows.

On July 10 Bernanke commented that the US needs “highly accommodative monetary policy for the foreseeable future.”

Transcripts from the Federal Reserve’s June policy meeting showed that many officials wanted to see a better labor market before tapering bond purchases. The price of gold more than doubled from 2008, reaching a record price of $1,923.70 per ounce in September 2011. At that time the Fed sliced interest rates to a record low while also buying debt. In April the price of gold began to crash as investors no longer felt secure with gold as a secure place to store value.

“Bernanke’s comments put some positive feeling back into gold and into all commodities,” said Dan Denbow, a fund manager at the $1 billion USAA Precious Metals & Minerals Fund in San Antonio. “The Fed has been working hard to show that taking back a little bit of bond buying isn’t removing accommodation, and Bernanke was very firm on that. There was a bit of a sentiment shift.”

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Ben S. Bernanke, Federal Reserve, Gold,

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