* Bernanke comments taken to support QE expectations
* Euro climbs vs dollar, lifting gold to 2-week high
* Speculators cut gold long bets for third week
(Updates, refreshes prices, adds comment)
By Jan Harvey
LONDON, March 26 Gold prices rose 1 percent on
Monday after comments from U.S. Federal Reserve Chairman Ben
Bernanke that faster growth will be needed to boost employment
supported expectations that further quantitative easing measures
may be necessary.
Spot gold was up 1.1 percent at $1,680.06 at 1411
GMT. It earlier hit a two-week high of $1,683.79 after Federal
Reserve Chairman Ben Bernanke said the U.S. economy needed to
grow more quickly if it is to produce enough jobs to bring down
the unemployment rate.
"I think it (rose) on the back of Bernanke's comments, which
people have taken to mean that further funding might be
required," Simon Weeks, head of precious metals at Scotia
Mocatta, said. "I think people have taken that to mean that gold
is still going to be in demand."
U.S. gold futures for April delivery were up $19.00
an ounce at $1,681.40.
The euro hit its highest against the dollar in three weeks
and the U.S. unit slid to a three-week low against the Swiss
franc on Monday after Bernanke's comments.
Sentiment towards the euro remains cautious, however, as
investors worried about the troubles facing the euro zone
While concerns over the bloc's debt crisis were a key factor
driving gold to record highs last year, it has since
re-established its usual inverse relationship with the dollar as
the U.S. unit takes precedence as investors' haven of choice.
"If the dollar is going to strengthen over the next couple
of days, gold should see more downward pressure," said Standard
Bank analyst Walter de Wet.
"(But) looking past the next couple of weeks, I think the
rally is not over," he added. "In real terms interest rates
remain negative, and we expect them to remain negative for at
least another two years."
Data from the U.S. Commodity Futures Trading Commission on
Friday showed money managers in gold futures and options cut
their bullish bets for a third straight week to the weakest
level in two months.
"Declining a hefty 3.1 million ounces, the Comex gold book
now sits at a relatively modest 17.58 million ounces, bringing
positioning to its lowest level since the week of Jan. 10 and
some 53.1 percent of the all-time high," said UBS in a note.
"In just three weeks, spec net longs have collapsed by 10
million ounces. So in theory, from a positioning perspective,
gold's spec baggage looks relatively light... which suggests
some upside price direction is possible."
Volume data from the Shanghai Gold Exchange suggests demand
from China, the world's second largest consumer of the precious
metal, is soft, the bank added.
A Reuters poll suggested India's decision to double gold
import duty to four percent could cut imports to the number one
global consumer by a third in 2012, to their lowest level in two
Chinese and Indian demand has a huge impact on gold prices.
"Those two countries together make up about 42 percent of
total demand, compared to 23 percent of total demand five or six
years ago," Nick Holland, chief executive of miner Gold Fields,
told the Reuters mining summit on Monday.
"Those are two economies that are likely to grow at a
significant pace, certainly relative to the West," he added.
"They have a strong affinity for gold, and they also have an
increasing number of the population who are being urbanised. Of
the extra income they get, some will find its way into gold."
"I believe that is a fairly good underpin for the gold
Silver rose 1.5 percent to $32.68 an ounce. The
gold/silver ratio, or the number of silver ounces needed to buy
an ounce of gold, eased back to 51.44 from 52.1 on Friday.
Spot platinum was up 0.9 percent at $1,635.49 an
ounce, while spot palladium was up 0.9 percent at $659.25
(Additional reporting by Michelle Martin. editing by William