By: Tom Jennemann San Francisco 29/08/2011 - Gold on the Comex division of the New York Mercantile Exchange traded in a choppy fashion Monday as price movements were exacerbated due to light volumes. Gold futures for December delivery were last down $2.20 at $1,795.20 per ounce in New York. Trade has ranged from $1,781.20 to $1,841.50. “Gold has already had a volatile, volatile day,” Sterling Smith, an analyst with Country Hedging, said. “Part of the reason behind this is that trade is unusually thin due to the aftermath [of Hurricane Irene]. Some traders in the [New York City] tri-state area are still having trouble getting into the office,” he added. Additionally, the London markets are closed for a bank holiday and the week before Labor Day in the US is traditionally one of the slowest of the year. When volumes are low like they are today, price swings are often exaggerated. “The market was very impressive over the last three days, putting in a solid chart pattern. Where it closes today will have a lot to do with its fate. If we can manage to close gold above $1,815, then we will have a pretty good chance at the upside,” said Smith, who added that bargain hunters have supported the market when it dips below $1,800. Meanwhile, gold investors continue to digest Federal Reserve Chairman Ben Bernanke's speech from Jackson Hole, Wyoming, on Friday. The Fed chief did not discuss the potential for more quantitative easing (QE3) but did reiterate that interest rates would likely remain unchanged into 2013 and that the central bank “is prepared to employ its tools as appropriate to promote a stronger economic recovery in a context of price stability." “Bernanke didn't say anything we haven't heard before. The fact that he didn't specifically mention QE3 is a disappointment on one hand, but at same time he left the option on the plate,” Smith said. Bernanke also inferred that President Obama and Congress are now better positioned than the Fed to develop a fiscal stimulus package if growth worsens in the coming quarter, Fastmarkets analyst Jono Remington-Hobbs, noted. “The speech indicates that Bernanke still has the tools to help inflate the economy if it continues to contract, but he has acknowledged that if the government does not pull its weight and produce better bi-partisan results then US growth could continue to languish in the longer term, as QE has twice proven to only be a short term boost for the economy,” Remington-Hobbs added. In the wider markets, the euro was up slightly against the dollar at 1.4510, while the Dow and S&P 500 were last up 1.72 and 2.04 percent, respectively. In gold specific news, the speculative length for the Comex gold contract fell by 32 tonnes, or four percent, to 797.2 tonnes in the week ending August 23. This was due to a 31.8 tonne drop in speculative longs and a 0.2 tonne increase in shorts, according to the Commodity Futures Trading Commission. “The fall off in gold speculative longs, points to a market that whilst not overly bearish (no strong surge in speculative shorts) is questioning further upside for gold,” Standard Bank said in a note. “Speculative shorts remain above last year’s average. Further price dips in the near term can be expected, should the market’s perception of risk start to change,” the analysts added. As for the other precious metals, Comex silver for September delivery was last down 30 cents at $40.655 an ounce. Trade has ranged from $40.425 to $41.800. Platinum for October delivery on the Nymex was last down 90 cents at $1,826.00 an ounce, while the September palladium contract was up 65 cents at $758.40.

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