MW : Gold holds to gains after Bernanke, housing data
The one-two punch of positive economic comments supported the precious metal, which had earlier advanced after an influential survey of European purchasing managers indicated the single-currency region was poised to return to economic growth in the third quarter. See full story.
Gold for December delivery added $14, or 1.5%, to $955.70 an ounce in electronic trading in New York. September copper gained 11 cents, or 4%, to $2.851 a pound.Also helping metals advance, the dollar fell against its major rivals, extending losses after the Bernanke speech and existing home sales data.
The dollar index (DXY 78.23, -0.15, -0.20%) , which measures the U.S. unit against a basket of six major currencies, fell to 78.022 from 78.330 late Thursday. The index has lost 1.1% this week.Increasingly, gold has taken more direction from other commodities and the dollar, rising when the economic outlook improves, rather than playing a contrarian role. A weaker dollar tends to boost the price of dollar-denominated commodities as it makes them cheaper for holders of other currencies.
Bernanke, speaking at the start of a two-day gathering of bankers and academics in Jackson Hole, Wyo., said the world had been through the "most severe financial crisis since the Great Depression," he said. "As severe as the economic impact has been, however, the outcome could have been decidedly worse," he said. Read more on Bernanke.
As speeches and interviews trickle out of the mountain retreat, markets were tuned into signs on when and how quickly they plan to withdraw the vast amounts of liquidity they injected in the financial system to avert a global economic depression.
Also, the National Association of Realtors said resales of U.S. single-family homes and condos rose 7.2% to the highest level since August 2007. Read more on homes sales.
Oil futures and U.S. stocks added to gains after the speech and data, both released at about 10 a.m. Eastern. The dollar extended losses. It's been playing the role of a safe-haven asset, taking over gold's traditional role.
