Gold Gains as Fed Chairman Points to “Continued” Stimulus, Euro Leaders To Increase Bailout Firewall, But Spain “Risks Contagion”
By: Ben Traynor
Monday, 26 March 2012
London Gold Market Report
WHOLESALE MARKET gold prices jumped to $1679 an ounce ahead of Monday’s US trading – up nearly 1% on last week’s close – while stocks, commodities and the Euro also gained and government bond prices dipped, after Federal Reserve chairman Ben Bernanke said the US economy still needs “continued accommodative polices” despite recent signs of improvement.
Silver prices meantime rose to $32.76 per ounce – up 1.5% from where they ended Friday.
“A wide range of indicators suggests that the job market has been improving, which is a welcome development indeed,” Bernanke told the national Association for Business and Economics Annual Conference on Monday morning.
“Still, conditions remain far from normal, as shown, for example, by the high level of long-term unemployment and the fact that jobs and hours worked remain well below pre-crisis peaks.”
Bernanke added that a fall in the unemployment rate “will likely require a more-rapid expansion of production and demand from consumers and businesses, a process that can be supported by continued accommodative policies.”
Over in India, where many gold dealers remain on strike over the recent increase in gold import duties, physical gold demand “remains low”, says Standard Bank commodities strategist Walter de Wet.
“We do expect demand to pick up in April as the Akshaya Tritiya festival in late April is fast approaching,” De Wet adds, noting that Akshaya Tritiya is India’s second-biggest festival for buying gold.
Indian gold imports will drop to 665 tonnes this year – a drop of nearly one third on 2011’s figure –according to the median estimate in a poll of importers, jewelers and brokerages conducted by newswire Reuters.
European leaders are set to expand the size of the region’s so-called ‘firewall’, according to press reports Monday.
German chancellor Angela Merkel and finance minister Wolfgang Schaeuble have dropped their opposition to combining unused funds in the €440 billion European Financial Stability Facility with the €500 billion European Stability Mechanism when the latter becomes operational in July, German newspaper Der Spiegel reports.
Accounting for funds already committed to Greece, Ireland and Portugal, the move would boost the amount of bailout funds available to around €740 billion, according to the Financial Times.