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Gold drifts, awaits Bernanke speech

Fed Chairman Ben Bernanke will deliver a speech in Jackson Hole, Wyoming at 1400 GMT, which could offer fresh clues on the path of interest rates and influence gold’s next moves.

“Choppy trading is likely to continue as no fresh economic data will be released and the major event, the Bernanke speech...will take place towards the close of European trading,” said Peter Fertig, director of FX and commodity strategy at Dresdner Kleinwort, in a note.

Dealers said that any suggestion the Fed’s two-year credit-tightening cycle had come to an end could spur selling in the dollar. A weaker dollar makes dollar-priced gold more attractive to buy for holders of other currencies.

Spot gold XAU was quoted at $622.00/623.50 per ounce at 0946 GMT, up slightly from $620.30/621.05 late in New York on Thursday.

Conflicting forces

In the absence of fresh news, conflicting forces are cancelling each other out and leaving gold stuck in a range.

Gold is supported by high oil prices and the threat of a hurricane hitting the US Gulf, and at the same time dragged down by U.S housing data that indicates the risk of inflation is decreasing, Fertig said.

Gold is often bought as hedge against inflation.

“This market continues to go nowhere in a hurry as the contracting range of the last month grinds on. After such prolonged inactivity we are not expecting the price to explode into life again until the vacation season has ended,” said technical analysts at Barclays Capital.

Silver edged up but seemed to be losing some strength after rising as far as $12.59 an ounce on Thursday. Spot silver XAG was quoted at $12.35/12.45 an ounce, versus $12.27/12.37 late in New York.

Silver, mainly used in jewellery, photography and electronics, rose to its highest level since May 31 at $12.66 an ounce on Wednesday.

In other precious metals, platinum XPT fell to $1,221/1,226 an ounce from $1,227/1,232 late in New York.

Sister metal palladium XPD was down slightly at $341/346 an ounce.