Gold rises for 4th straight week

By Frank Tang

NEW YORK (BestGrowthStock) – Gold trimmed gains on Friday after Federal Reserve chief Ben Bernanke said the Fed was ready to act on growth if needed, but the metal posted a fourth straight week of increase as recent weak economic data boosted its safe-haven appeal.

Bullion has benefited from fears of a double-dip recession as durable-goods orders and home sales data this week pointed to a stalling economic recovery.

(Graphic: http://link.reuters.com/kuv45m)

On Friday, Bernanke said the economic recovery had weakened more than expected and the U.S. central bank stood ready to act if necessary to spur growth.

“The fact that the economy is not where the Fed wants it to be, and that the Fed is willing to do whatever it needs to spur economic growth, translates into good gains in the stock market,” COMEX gold floor trader Mihir Dange said.

Gold gave up some early gains on a Wall Street rally as Bernanke’s comment about Fed readiness fueled risk appetite, denting gold’s appeal as an alternative investment. The S&P 500 index rose 1.66 percent.

Spot gold was last at $1,235.85 an ounce at 3:14 p.m. EDT from $1,234.94 late in New York on Thursday. U.S. gold futures for December delivery settled up 20 cents at $1,237.90.

Gold hit a session high of $1,242.25 an ounce after data showed U.S. growth slowed more sharply than initially thought in the second quarter.

The metal’s trend has turned bullish since it hit a low at $1,160 on July 18, with the Fed having downgraded its economic outlook earlier in August. Gold is on track to rise 5 percent this month.

Eugen Weinberg, commodities analyst at Commerzbank, said Bernanke’s remarks meant the Fed was ready to use more quantitative-easing tools, raising the possibility of inflation, which would be bullish for gold.

Analysts say further quantitative easing could potentially see gold heading back toward its record high at $1,264.90 an ounce seen on June 21.

Gold broke out of the relatively narrow range it had kept for much of the summer to hit a two-month high of $1,244 an ounce on Thursday as investors fretted about the U.S. economy.

STIMULUS MEASURES

Analysts were optimistic toward a recovery in physical demand from major consumers such as India. A Reuters poll showed India’s gold imports could rise to 504.5 tons this year.

Physical gold demand also tends to rise in August as jewelers stockpile inventory ahead of India’s festival season, which starts with Raksha Bandhan on August 24 and extends until Dhanteras in November, the biggest gold-buying day.

The gold market will closely monitor another round of economic data out of the United States next week, including personal income on Monday, consumer confidence on Tuesday, auto sales on Wednesday, and August nonfarm payrolls on Friday.

Silver was at $19.03 an ounce versus $18.90. The metal has retreated from the two-month highs it hit on Thursday at $19.15 an ounce, but rose 5 percent this week, its biggest one-week climb since early April.

The ratio of gold to silver — how many ounces of silver are needed to buy an ounce of gold — slipped to its lowest since early August at about 65 as the white metal became increasingly expensive compared to gold.

Platinum was at $1,529.00 an ounce against $1,525, while palladium was at $504 against $497.63.

(Additional reporting by Jan Harvey and Pratima Desai in London; Editing by Dale Hudson)

Gold rises for 4th straight week