WSJ:PRECIOUS METALS: Spot Gold Higher Ahead of Bernanke Testimony
--Spot gold higher, supported by weaker euro and stimulus hopes
--All eyes on Ben Bernanke's two-day testimony Tuesday and Wednesday
--Gold seen remaining rangebound in near-term
By Francesca Freeman
Spot gold is higher in Europe Tuesday, buoyed by a weaker dollar and hopes for further U.S. quantitative easing ahead of Federal Reserve Chairman Ben Bernanke's appearance in Congress later in the global day.
At 0934 GMT, spot gold traded at $1,595.13 a troy ounce, up 0.4% on the day. Meanwhile, the euro was 0.3% higher versus the dollar at $1.22979, boosting the appeal of dollar-denominated assets such as gold, which are more affordable in other currencies when the greenback softens.
Bernanke's semiannual two-day testimony Tuesday and Wednesday is expected to be the main focus of the gold market this week. Since gold is often sought as a hedge against inflation and currency weakness at times of increased liquidity, investors will be on the lookout for signs of a third round of quantitative easing.
"I suspect that once again [Bernanke] will say that QE is part of the Fed arsenal, to be used if necessary, but refrain from actually giving any specifics. On that basis, the gold bulls will probably be disappointed, but I don't see a massive sell off following this," said David Govett, head of precious metals at Marex Spectron.
"However, if he does announce any form of stimulus, look for gold to move sharply higher," Mr. Govett added.
Whether gold can sustain a strong move in either direction remains to be seen, however.
"Gold prices are still confined to wider ranges given anemic physical and investor interest," said VTB Capital analyst Andrey Kryuchenkov. "Bullion will likely remain rangebound, trading with the euro and other metals in the precious sector until at least the Federal Open Market Committee's July/August meeting," he added.
Gold's upside will likely be capped at $1,620/oz and then at $1,630/oz, while intermediate support remains at $1,550/oz, said Mr. Kryuchenkov. "Our key short-term support is at $1,540/oz-$1,538/oz, provided gold closes below $1,550/oz," he added.
Elsewhere in the precious metal complex, spot silver was 0.7% higher at $27.5/oz, spot platinum was up 0.8% at $1,422/oz and spot palladium was 1.4% higher at $581.80/oz.
Write to Francesca Freeman at francesca.freeman@dowjones.com
