Gold rises after Bernanke promises action

AP News
Posted: Aug 31, 2012 5:05 PM
Gold rises after Bernanke promises action

The price of gold and other precious metals jumped Friday, after Federal Reserve Chairman Ben Bernanke made clear that he expects to take further action to try to boost the economy.

The Fed can try to prop up the economy by buying government bonds, lowering interest rates and other measures. Those moves can lead to inflation. And when investors believe inflation is coming, they often buy gold and other precious metals because they believe they are protections against inflation.

In a speech at the Fed's annual retreat in Jackson Hole, Wyo., Bernanke stopped short of committing the Fed to any specific move. But he said that the central bank will do more, because unemployment is so high and the economic recovery "far from satisfactory."

Gold, palladium and platinum all jumped about 2 percent. Silver jumped more than 3 percent.

All can be traded as precious metals, though silver, palladium and platinum can trade as industrial metals as well since they are used in manufacturing certain products.

Copper, an industrial metal, rose only slightly.

Gold for December delivery rose $30.50 to $1,687.60 per ounce. December silver rose 99.6 cents to $31.442 per ounce. September palladium rose $13.05 to $627.95 per ounce. October platinum rose $33.60 to $1,537.30 per ounce.

Copper for September delivery rose 1.35 cents to $3.454 per pound.

Oil prices, which had already risen this week because of Hurricane Isaac's threat to Gulf Coast rigs, also rose after Bernanke's speech. If the Fed succeeds in stimulating the economy — a big if — it could boost demand for the energy commodities needed to keep the economy running.

Benchmark crude rose $1.85 to end at $96.47 per barrel in New York. Brent crude, which is used to price oil used by many U.S. refiners, rose $1.92 to $114.57 per barrel in London.

In other energy futures trading, heating oil rose 5 cents to $3.18 a gallon, while wholesale gasoline climbed 6 cents to $2.97 a gallon. Natural gas rose 5 cents $2.80 per 1,000 cubic feet.

Several key crops, however, saw their prices slip.

December wheat fell 13.5 cents to $8.895 per bushel. December corn fell 8.75 cents to $7.9975 per bushel. November soybeans fell 7 cents to $17.565.

Prices for wheat, corn and soybeans have spiked since June, because of a broad drought that has crippled crop supplies. This week, Hurricane Isaac flooded soybean fields in parts of the country, which has also pushed up prices.

By Friday, though, investors had already worked those worries into their trading.