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Gold Up Ahead of Bernanke Announcement

Monday, 14 January 2013
Written by  Market Watch
Published in Gold Investing

Gold moved up to start the week as the market and investors awaited any hints from Fed Chair Ben Bernanke regarding the future of monetary policy. Bernanke is scheduled to speak today, so at least some hints should be given regarding what may happen regarding monetary policy in the future and how it will affect America.

Gold for February delivery GCG3 +0.47% advanced $3.40, or 0.2%, to $1,664 an ounce on the Comex division of the New York Mercantile Exchange. This price was early on, as the yellow metal ended up gaining over $10 at the end of trading. Silver was also up to start the week, gaining 41 cents, or 1.3%, to $30.82 an ounce.

“There have been more hawkish noises coming from certain Federal Open Market Committee members of late, and any signs that suggest the recovery is on track or that inflation risks are heating up would lend weight to their calls for an earlier end to accommodative policies,” said Ben Traynor, chief economist at Bullion Vault.

Chicago Fed President Charles Evans, president of the Federal Reserve Bank of Chicago, told a Hong Kong audience overnight that monetary policy needs to help produce the most “robust demand growth” the U.S. can reasonably achieve with appropriate measures for price stability. See: Monetary policy needs to boost growth, says Fed’s Evans.

The United States retail sales numbers were also an area of speculation, as Americans will now see even more money taken out of their paychecks because of the Social Security withholding situation.

U.S. retail-sales data due Tuesday and consumer-price-inflation data on Wednesday are “worth keeping an eye on” as well, said Traynor. The same holds for Chinese data due out Friday, including gross domestic product for the fourth quarter, he said.

”Any slowdown in China would likely have significant ramifications for gold demand given the huge role China plays in the global gold market,” he said.

There are a number of issues this week that could make or break gold. However, it does look like the yellow metal may experience a bit of a boost through this week, especially if Ben Bernanke drops hints regarding the future of monetary policy and how long it will stay in place.

Original Article: Market Watch by the Wall Street Journal

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