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Gold Prices Rally after Bernanke’s Dovish Comments; Silver Prices Also Rally

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Gold prices rose sharply on Thursday to settle at a near three-week high level as a broadly weaker U.S. dollar, as result of very dovish comments from the Silver prices also rallied in trading on Thursday.

U.S. gold futures for August delivery jumped $32.50 ounce or 2.6% to settle at $1,279.90 while spot gold was last up 1.52% to $1,282.81 an ounce.

Silver futures were last up 4.20% to $19.97 an ounce.

On Wednesday, Bernanke, while addressing a group of senior economists at the National Bureau of Economic Research said that current economic environment, especially the fragile U.S. labor market, warranted the continuation of the quantitative easing for a foreseeable future.

The remarks made by Bernanke took market participants by surprise. Earlier in June, Bernanke laid out a pullback strategy for the $85 billion monthly bond purchase program, citing that the U.S. macroeconomic environment was improving significantly. Since then the metal tumbled about 10% as investors sold inflation-hedge bets in hordes  even as the U.S dollar and yields on treasuries soared.

“I think that a degree of caution by the Fed is now likely to replace the rather optimistic picture that was implied in May and June, as the economic recovery is not quite clear cut as previously thought,” said Jonathan Butler, an analyst at Mitsubishi, according to Reuters.

A data provided by Reuters showed that holdings of the SPDR Gold Trust (ETF) (NYSE: GLD), the world’s largest gold-backed exchange traded fund, fell another 0.1% to 30.192 million ounces on Wednesday, a lowest level recorded since February 2009.








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edliston
Post Written By: Ed Liston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.

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Ed Liston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing.

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