Gold for December delivery added $34.10 to close at $1,797.30 an ounce at the Comex division of the New York Mercantile Exchange. The gold price has traded as high as $1,800 and as low as $1,759.50 while the spot gold price was adding $35.80, according to Kitco's gold index.
Federal Reserve Chairman, Ben Bernanke, offered no surprises in his speech at Jackson Hole Friday, but he did allow the possibility for further intervention. Bernanke said the Fed is willing to step in if needed to trigger a stronger recovery, but barely discussed any monetary policy. The Fed's policy meeting in September is now two days instead of one, which indicates stimulus is on the table but whether or not there will be an agreement or policy shift is a different story.
Gold prices and equity markets rallied, buoyed by expectations of another Bernanke life raft. More money in the system could trigger higher inflation, currently at 1.8% excluding food and energy, which makes gold more appealing as protection against paper currencies. Now expectations shift to the Fed meeting in September. "It's become an annual ritual to expect Jackson Hole to be a momentous occasion in all of these markets," says Jon Nadler, senior analyst at Kitco.com. Nadler thinks that Bernanke isn't in a position to pump more money into the system just because some macro data is disappointing and the stock market is suffering. There were also three dissenters at the last Fed meeting in early August who disagreed with keeping interest rates low until mid-2013 because of rising inflation, so printing more money seems like an even farther reach. Nadler says that any disappointment would lead investors out of stocks and into gold, but "if it's an across the board selloff in all types of assets that were predicating their further advances on easy money, if we have a wipeout of that nature, it could be a short term across the board sell signal." Gold prices have corrected 11% in two-and-a-half days, giving up half of its gains from its two month rally which pushed the metal to an intraday high of $1,917 an ounce. The massive selloff could also be igniting bargain hunters wanting to take advantage of "lower" gold prices. Nadler, who warned of a 35% correction two weeks ago, still stands by that prediction which would take gold prices to $1,247 an ounce. Many experts, however, think that gold will trend higher as the macro backdrop has not changed. European governments are still struggling with ballooning debt and trying to save Greece from imploding. Germany is now making headlines with rumors swirling about a possible short selling ban and rating downgrade, both of which were denied. With investors so headline skittish, gold is fulfilling that safe haven role.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV