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NEW YORK (
Gold prices were surging Thursday after
Federal Reserve Chairman Ben Bernanke reiterated the central bank's commitment to low interest rates and continuation of monetary stimulus.
Gold for August delivery at the COMEX division of the New York Mercantile Exchange was jumping $33.30 to $1,280.70 an ounce. The
gold price traded as high as $1,297.20 and as low as $1,262.10 an ounce, while the spot price was popping $22.29.
Bernanke followed his speech on Wednesday at the Massachusetts Institute of Technology with comments that the Fed would continue in the near term to implement monthly asset purchases and keep the short-term federal funds rate at historically low levels.
Gold prices since the 2008 financial crisis rode a huge bull-market rally on the backs of investors who found value in the asset as a hedge against inflation worries born from fiscal and monetary stimulus and as a safety play against political and economic turmoil.
The yellow metal is far off its September 2011 all-time high, and has experienced a deep drop since mid-April of this year.
Gold is currently poised for its fourth consecutive winning session, which would mark the longest stretch since April. But analysts remain pessimistic about the longer-term price performance.
Gold has experienced a nice bounce this week, but if it can't cut above $1,301 an ounce then the bulls have no case for a rally in the near term, said Walter Zimmermann, chief technical analyst at ICAP.
Zimmermann said, despite this week's rise, gold is likely to extend its bear-market rally, and that if the yellow metal doesn't hold above $1,167 the market could see a drop as far as $800 an ounce.
Physical demand has added support to the bottom of the gold market, but not like it did during April's massive tumble. The summer months offer less demand in India and China as the holiday season for buying the precious metal typically doesn't accelerate until the fall. Taxes on imports in India have hurt demand there, but BullionVault's index for buying in June showed that there were still more buyers than sellers of the physical metal.