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NEW YORK (
surged Tuesday as
Federal Reserve Chairman Ben Bernanke gave the yellow metal a boost with his assertion that the central bank would continue a policy of low interest rates.
Gold for April delivery settled up $28.90 at $1,615.50 an ounce at the Comex division of the New York Mercantile Exchange. The
traded as high as $1,619.70 and as low as $1,583.70, while the spot price was popping $20.90, according to Kitco's gold index.
"He [Bernanke] says asset purchases will continue, and then throughout the testimony one of the things he said is that while he supports the Japanese fight against deflation, what does that mean? More easy money, more money printing, and clearly that's a good thing for gold in the medium term,"
Axel Merk, chief investment officer of Merk Investments, said in an interview.
Senators barraged Bernanke for some two hours with questions about the economy and the Fed's role in maintaining low inflation rates and reducing the unemployment rate -- the bank's "dual mandate."
"Notably, keeping longer-term interest rates low has helped spark recovery in the housing market and led to increased sales and production of automobiles and other durable goods," Bernanke said in his testimony. "By raising employment and household wealth--for example, through higher home prices--these developments have in turn supported consumer sentiment and spending."
for March delivery added 27 cents to $29.26 an ounce, while the
U.S. dollar index
was slipping 0.05% to $81.85.
"I think there was some noise a few weeks ago about the Fed potentially giving up on monetary stimulus; I think it's premature for that," said Troy Logan, senior economist at Warren Financial Service. "I think the Fed is going to be accommodative for a while. So they're going to continue to support the economy."
Gold mining stocks closed mostly higher on Tuesday. Shares of
NovaGold Resources popped 4%, while shares of
Randgold Resources(GOLD - Get Report) rose 3.5%.
Among volume leaders,
Barrick Gold(ABX - Get Report) was up 1.5%
SPDR Gold Trust(GLD) added 1.2%, while
iShares Gold Trust(IAU) jumped 1.3%.
-- Written by Joe Deaux in New York.