Forexpros – Gold futures spiked higher on Monday, climbing to an eight-day high after Federal Reserve Chairman Ben Bernanke said further accommodation is needed to bring big gains in employment, renewing speculation over a third round of quantitative easing.
On the Comex division of the New York Mercantile Exchange, gold futures for June delivery traded at USD1,681.75 a troy ounce during early U.S. morning trade, rallying 1%.
It earlier rose by as much as 1.1% to trade at USD1,682.25 a troy ounce, the highest since March 14.
Gold futures were likely to find support at USD1,627.75 a troy ounce, the low from March 22 and short-term resistance at USD1,706.15, the high from March 13.
Gold futures spiked higher, jumping nearly USD12 per ounce in a matter of minutes after Ben Bernanke said that he was unsure if recent gains in the job market will last.
In a speech at the National Association for Business Economists 2012 Policy Conference earlier, Bernanke added that accommodation is needed to sustain improvements in the labor market.
Over the weekend, Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Company, said the Fed is “likely to hint” that it plans to arrange a third round of debt purchases when policy makers meet in April.
Quantitative easing, or major asset purchases by the Fed, keeps interest rates and borrowing costs low, which makes gold more attractive compared with yield- or dividend-bearing assets such as bonds or stocks.
When the Fed announced the second round of quantitative easing, known as the QE2, in November 2010, gold prices scored record highs for four consecutive sessions.
Gold prices have been under pressure in recent weeks as hedge funds and large institutional investors unwound long positions after the Federal Reserve gave an upbeat assessment of the U.S. economy earlier in the month, which reduced expectations for a third round of U.S. monetary easing by the central bank.
The euro turned higher against the U.S. dollar following Bernanke’s words. The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was down 0.24% to trade at 79.33.
Elsewhere on the Comex, silver for May delivery rose 1.4% to trade at USD32.72 a troy ounce, while copper for May delivery jumped 1.25% to trade at USD3.856 a pound.
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