Gold settles at record high on Fed talk

Prices rally after Fed chief Ben Bernanke says the government would consider more monetary easing. Silver tops $30 an ounce.

By TheStreet Staff Dec 6, 2010 11:10AM

the streetGold © Comstock Images/JupiterimagesBy Andrea Tse, TheStreet

 

Updated at 3:06 p.m. ET


Gold prices settled at a record high Monday after Federal Reserve Chairman Ben Bernanke said Sunday that the Fed would consider expanding its quantitative easing program.

 

In an interview with "60 Minutes" over the weekend, Bernanke signaled that the central bank could expand its $600 billion bond-purchase program to address the high unemployment rate.

 

Fueling inflation sentiment, the announcement, coupled with ongoing uncertainty about the eurozone's ability to contain its debt crisis, helped push gold futures into positive territory. .

 

Gold for February delivery rose $9.90 to settle at $1,415 an ounce at the Comex division of the New York Mercantile Exchange, above its previous high close of $1410.10 set on Nov. 9, but shy of its all-time intraday high of $1,424. Gold today traded as high as $1,422.40 and as low as $1,409.80.


Bernanke said he hopes the Fed's bond buying will lower bond yields and encourage investment in stocks -- boosting business activity and economic growth in the country.

The U.S. dollar index was rising 0.2% to $79.56, while the euro was down 0.5% to $1.33 versus the dollar. The spot gold price was adding $2.80, according to Kitco's gold index.

 

"With Big Ben . . . spouting that kind of stuff about the economy and the possibility of more (quantitative easing), I'm surprised at the dollar buying this morning. I guess it's a bond buying thing, as yields on Treasuries have dropped from Friday morning's levels," EverBank World Markets President Chuck Butler wrote in a morning note.

 

Bernanke said fears that the Fed would be printing more money and taking inflation risks through its bond purchases are a myth. He said the Fed isn't printing money when buying Treasurys and the purchase won't result in a significant expansion of money circulating in the market, The Associated Press reported.

 

Gold prices approached new highs Friday, driven by a particularly disappointing November U.S. unemployment report. Investors fled for security in precious metals as the Labor Department reported that nonfarm jobs rose 39,000 as the private sector increased jobs by 50,000. The unemployment rate rose to 9.8%, the loftiest level since April. All the results were greatly below expectations.

 

Silver prices added 46 cents at $29.74 per ounce after briefly breaking the $30 mark for the first time since 1980. Copper closed up 1 cent at $4.01 per pound.

 

Gold mining stocks, a risky but potentially profitable way to buy gold, were mostly higher Monday.

 

Freeport McMoRan Copper & Gold (FCX) was adding 1.4% at $110.44, while Barrick Gold (ABX) was 1.3% higher at $54.72. Gammon Gold (GRS) was gaining 0.4% to $7.82 and Hecla Mining (HL) was up 5.1% to $11.03.

 

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6Comments
Dec 7, 2010 8:57AM
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Hunker down and out survive your government. No need to go off the cliff with them.
Dec 7, 2010 12:21AM
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DUMB AS A ROCK MAYBE DUMBER THAN A ROCK , EVEN A ROCK KNOWS IT WILL SINK IF YOU THROW IT IN THE RIVER, BUT THIS GOVERNMENT SEEMS TO THINK THE STONE OF INFLATION WILL NOT SINK THE ALREADY OVER FLOWING IN DEBT ECONOMY.  JUST A DUMB QUESTION BY HOW CAN INFLATION HELP THE UNEMPLOYED AND NOW HOMELESS ????? I WOULD SAY IT CAN NOT,,, IT IS EVERYONE'S FAULT IN AMERICA THE JOBS WENT TO CHINA BECAUSE THE WAGE WAS TO HIGH IN AMERICA, NOW ITS TIME TO GET THE FACTORIES FIRED BACK UP AND PUT A CEILING ON WAGES FOR 10 TO 15 YEARS UNTIL WE CAN GET THE ECONOMY AT A PACE WE CAN MAKE A PROFIT. WAGE AT $8 AN HOUR WILL FEED A FAMILY UNEMPLOYMENT WILL NOT FEED THE FAMILY BECAUSE THERE IS NO FUTURE IN DEPRESSION
Dec 6, 2010 10:57PM
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Silver and Gold both have been beating the stock market for years.  As if this is something new?

The stock market is down substantially when measured in gold and silver money vs. paper money, backed by nothing.

Dec 6, 2010 9:23PM
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Fleckenstein said gold would soar as the Fed/Bernank/Obama destroy the dollar. The sad part is the average person will also be devastated by soaring food and gas prices.

Wait until oil shoots above $120 again!

Dec 6, 2010 7:26PM
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Sorry Mary you may be debt free but how long will your wealth hold out when prices hit the ceiling. 
Dec 6, 2010 7:15PM
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QE3........ Great. Just what we need. When the dust settles and a loaf of bread is 10 bucks. I'm certainly glad I am 100% debt free. This is going to be a fun ride. Hold on to your wallet........
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