MW: Gold rises along with dollar, ahead of Bernanke speech
By Claudia Assis & Nick Godt, MarketWatch
NEW YORK (MarketWatch) -- Gold futures held onto gains on Wednesday, as a rising dollar failed to stop upward momentum for the precious metal amid safe-haven buying, and investors awaited a speech from Federal Reserve Chairman Ben Bernanke that might move the greenback.
Gold for June delivery, the most active contract, was up $7.20, or 0.6%, at $1,143.20 an ounce on the Comex division of the New York Mercantile Exchange.
Greek bonds were hit Tuesday as investors reacted to uncertainty about how the joint European-International Monetary Fund aid package agreed to last month would function.
The euro came under pressure, lifting the dollar, normally a negative for gold, which works as an alternative asset against weaker currencies.
"In an ideal situation, a rising dollar is bearish for gold; today, and for the last couple of sessions at least, people are actually hedging their exposure to currencies into dollar and gold," said Pradeep Unni, an analyst with Richcomm Global Services in Dubai.
The relationship between a weaker dollar and a stronger gold is being tested because of the seriousness of the Greek problem, but that negative correlation is likely to prevail, he said.
The dollar index (DXY 81.65, +0.26, +0.32%) , the benchmark used to track the greenback against a basket of global currencies, rose to 81.56.
The SPRD Gold Trust (GLD 112.23, +1.20, +1.08%) , the largest exchange-traded fund backed by gold, gained 1%. The ETF has gained 1.1% in the last three months, and it is up 29% in the past 12 months.
Other factors weighing on gold Wednesday include a speech from Bernanke, who will be speaking about economic challenges in a speech due for delivery at 1:30 p.m. Eastern.
In addition, talk around the yuan will come into play as a spokesman announced Treasury Secretary Timothy Geithner is headed to Beijing to meet Vice Premier Wang Qishan, who is responsible for economic affairs.
On Tuesday, gold finished up slightly, as investors focused on bullish factors such as physical demand and talk about inflation, and the precious metal overcame a bout of profit-taking that took down other metals.
