Gold extends losses on Bernanke comments, Chinese demand supports

A A A - Gold prices on Monday were off the near 6-month lows hit Friday, when Federal Reserve Chairman Ben Bernanke said the U.S. economy was improving, and while sentiment remained bearish, talk of building physical demand in China supported the precious metal.

On the Comex division of the New York Mercantile Exchange, gold futures for April delivery were down 0.11% at USD1,607.80 a troy ounce in U.S. trading on Monday, up from a session low of USD1,607.10 and down from a high of USD1,618.70 a troy ounce.

Gold futures were likely to test support USD1,598.25 a troy ounce, Friday's low, and resistance at USD1,670.25, the high from Feb. 11.

Trading was quiet, as U.S. markets were closed for the President's Day holiday.

Fed Chairman Ben Bernanke told a G20 meeting of finance ministers and central bankers last week that while unemployment rates remain high in the U.S., the economy is improving and will help bring the global economy up with it.

The news sent gold dropping to 6-month lows last week amid talk that the Fed may soon consider winding down its USD85 billion monthly bond-buying program, a monetary stimulus tool that weakens the dollar to spur recovery and job demand.

Gold and the dollar normally trade inversely from one another.

Weak output data released last week continued to fuel dollar demand as well on Monday.

Official data showed that U.S. industrial production contracted by 0.1% in January, missing expectations for a 0.2% rise and well below a 0.4% increase the previous month.

Talk that China will begin ramping up physical demand for gold now that the Lunar New Year holidays are over offset losses.

Meanwhile on the Comex, silver for March delivery was up 0.20% and trading at USD29.908 a troy ounce, while copper for March delivery was down 1.42% and trading at USD3.684 a pound. - offers an extensive set of professional tools for the Forex, Commodities, Futures and the Stock Market including real-time data streaming, a comprehensive economic calendar, as well as financial news and technical & fundamental analysis by in-house experts.
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This article appears in: Investing , Forex and Currencies

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