Gold hits new record after Bernanke, silver up 6 percent
NEW YORK (Reuters) - Gold rose to a record high of almost $1,530 an ounce on Wednesday and silver jumped 6 percent after the Chairman of the Federal Reserve gave no signs that the central bank would tighten monetary policy, leading the dollar to a three-year low.
It was the eighth record high in nine trading sessions for the gold, extending a rally that has seen the precious metal rise by more than $50 an ounce since April 15 and by more than $200 since the end of January.
Spot gold rose more than 1.5 percent to touch a record $1,529.90 an ounce after the Fed said it would end its $600 billion bond buying stimulus program in June as planned, and Chairman Ben Bernanke said he was in no rush to raise to raise short-term interest rates. Lower interest rates tend to fuel commodity prices, driving investors into riskier assets and pushing up prices.
"There was a contingent out there that believed there might be a hawkish expression in the statement and we didn't see that and I think gold moved up on that," said Bart Melek, director of commodities with TD Bank Financial Group.
Spot gold was last up 1.3 percent at $1,526.91 an ounce by 4:17 p.m. EDT (2017 GMT), easing slightly from the earlier record. U.S. futures for June delivery were last up 1.6 percent at $1,526.90 in after-hours trade, having also touched a record of $1,530.70 an ounce. The official settlement for Wednesday was $1,517.10 an ounce, up $13.60.
James Steel, metals analyst and Senior Vice President at HSBC in New York said the Fed's post-meeting statement had "put the nail in the coffin" of the idea that the Fed could tighten monetary policy faster than the market had previously thought.
"There will be no speed about reversing policy. Their accommodative policy has been ascribed in part to concerns about higher inflation and also have pumped up commodity demand abroad," Steel said. "Both of those things are good for gold."
Bernanke, speaking at the central bank's first post-decision news conference, said he expected a relatively weak number for U.S. GDP in the first quarter, and it would be at least two more meetings before the Fed considered raising rates.
The dollar fell to a three-year low against a basket of currencies .DXY as Bernanke was speaking. The euro rose versus the dollar to almost $1.49, the highest level since December 2009.
Credit Suisse analyst Tom Kendall said the weak dollar and other drivers for the gold price remained in place.
"It is the dollar, it is sovereign debt, whether that is the U.S. or the periphery of Europe. It is headline rates of inflation in emerging markets and developed markets and it is a bit of geopolitical uncertainty."
Spot silver jumped by as much as 6 percent to an intraday high of $48.24 an ounce but was still below the 33-year peak of $49.31 hit on Monday. It remains on track for a 25-percent gain this month and a near 50-percent rise this year, which would make it the top performing precious metal and commodity of 2011.
Spot silver was up 5.5 percent at $47.98 an ounce, while U.S. silver was last up 6.4 percent -- posting its largest percentage gain this year -- at $47.95 in after-hours trade. The official settlement earlier was $45.9580 an ounce, up 90.80 cents.
Implied volatility in silver options has been at its highest this week since November last year as the spot price has swung from lows around $43 to highs above $49 in the space of a week.
"The recent sharp increase in volatility is an indication of the increasing nervousness of market players and could be a sign that the rally in the silver price is approaching an end," said Commerzbank in a note.
Platinum was last up 1.5 percent at $1,827.50 an ounce, while palladium was up 2 percent at $768.00.
- Malaysia signals missing plane has crashed; probes false IDs |
- Malaysian plane presumed crashed; questions over false IDs |
- CORRECTED-UPDATE 4-Malaysia Airlines plane crashes in South China Sea with 239 people aboard - report
- Malaysian jet's disappearance among rarest of aviation disasters
- Radar showed missing plane may have turned back-Malaysia military