Gold rises after Bernanke tempers stimulus hopes

AP News
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Posted: Jul 14, 2011 4:03 PM
Gold rises after Bernanke tempers stimulus hopes

Gold prices continued to climb Thursday after Federal Reserve Chairman Ben Bernanke tempered hopes that a new stimulus package would be approved anytime soon.

Investors also bought gold because of concerns over Europe's financial debt crisis and negotiations in Washington over raising the U.S. government's borrowing limit.

Gold rose $3.80 to settle at $1,589.30 an ounce. The price was a record in dollar terms but below its peak in the early 1980s after accounting for inflation.

Bernanke told Congress the Fed was not taking immediate action to stimulate the economy. The day before, Bernanke left the door open to further stimulus measures, but only if the economy worsens.

Bernanke's comments left investors wondering what the Fed's next move will be even as President Barack Obama and lawmakers continued to negotiate over raising the government's debt limit ahead of an Aug. 2 deadline.

In Europe, yields on Italy's debt sold at auction jumped to their highest level since the introduction of the euro. A debt default for an economy as large as Italy's would hurt lending across the globe.

Gold and silver are seen as stable stores of value and many investors buy them when they're concerned about instability in other markets. September silver settled up 54.3 cents at $38.694 an ounce.

Most other commodities were lower.

Dave Meger, vice president of metals trading at Vision Financial Markets, said there is underlying support for many commodities but the markets likely will remain volatile until there is more clarity about the European crisis, the U.S. debt limit talks and the prospect of another round of U.S. economic stimulus measures.

September copper fell 2.35 cents to settle at $4.38 a pound, October platinum rose $7.30 to $1,774.30 an ounce and September palladium fell 65 cents to $783.35 an ounce.

Energy and agricultural products fell.

Benchmark crude for August delivery fell $2.36 to settle at $95.69 a barrel on the New York Mercantile Exchange after hitting $98.88 a barrel in earlier trading.

In other Nymex contracts, heating oil fell dropped 1.48 cents to settle at $3.0849 per gallon, gasoline lost 2.68 cents to $3.1248 per gallon and natural gas fell 2.9 cents to $4.358 per 1,000 cubic feet.

Wheat for September delivery fell 7.5 cents to settle at $7.07 a bushel, December corn fell 1.25 cents to $6.785 a bushel and November soybeans rose 4.25 cents to $13.84 a bushel.