Gold continues to rise ahead of Bernanke's speech

AP News
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Posted: Aug 27, 2012 3:57 PM
Gold continues to rise ahead of Bernanke's speech

The price of gold is at its highest level in four months as anticipation builds ahead of Federal Reserve Chairman Ben Bernanke's speech later this week in Wyoming.

Gold for December delivery rose $2.70 Monday to finish at $1,675.60 per ounce — the highest it's been since mid-April.

Bernanke's remarks at the Fed's annual conference are scrutinized for hints about what action the central bank may consider to help economic growth. His speech on Friday has taken on more importance this year because of the slower U.S. economy.

Fed officials have signaled that they may be ready to start another round of bond-buying to try to lower long-term interest rates. The goal would be to encourage more borrowing and spending and to help the stock market.

Gold and other commodities benefited from previous Fed bond-buying. Low interest rates pressured the dollar, and because commodities are priced in dollars, a weaker dollar makes them a bargain for traders who use other currencies.

In addition, gold often is used as a hedge against inflation.

Sterling Smith, a commodities specialist at Citibank Institutional Group, said that he believes the recent trend of higher prices is built on expectations that the Fed will take some type of action.

There also are lingering concerns about how European leaders are going to resolve the region's debt crisis and whether the European Central Bank will approve stimulus measures.

Commodity trading was light across the board because of a bank holiday in the United Kingdom and the upcoming Labor Day weekend in the U.S.

In energy trading, oil prices fell as concerns eased about supply disruptions in the Gulf of Mexico from Tropical Storm Isaac. In addition, traders questioned whether the government would release oil from U.S. reserves.

Benchmark oil fell 68 cents to finish at $95.47 per barrel in New York.

Heating oil rose 0.17 cent to end at $3.1118 per gallon, and gasoline gained 7.68 cents, or 2.5 percent, to $3.1548 per gallon. Natural gas fell 4.9 cents to $2.653 per 1,000 cubic feet.

Other metals prices were mixed. December silver rose 42.8 cents to end at $31.137 per ounce, September copper fell 0.7 cent to $3.4765 per pound, October platinum dropped $1.20 to $1,553.20 per ounce and September palladium gained $2.60 to $654.70 per ounce.

In agricultural commodities, orange juice futures fell 3.5 percent after Isaac veered to the west, raising expectations that Florida's orange groves would not sustain heavy damage. Orange juice for November delivery fell 4.15 cents to end at $1.138 per pound.

December wheat fell 7.25 cents to $8.8125 per bushel, December corn dropped 7.75 cents to $8.0075 per bushel, and November soybeans ended down 12.75 cents at $17.1875 per bushel.