Gold is on a bullish streak backed by a weakening Dollar and Bernanke’s dovish comments. The Dollar for the past few days is on a steady decline due to a rising Japanese Yen. Moreover, Bernanke’s comments of continuing with the current accommodative monetary policy, has diluted the expectations of an early QE tapering by the Federal Reserve.

On Thursday last week, Spot Gold edged up by 1% to a session high of $1,288.06 an ounce, while the US Gold futures for August delivery advanced by $6.70 to $1,284.20 an ounce. This was after a 1% slide to $1,277, on the previous day. But, continuing the rise on Thursday, Bullion again gained by 0.7% as the Comex Gold traded at $1,292.20 an ounce in the NYMEX. While, the US Gold futures for August delivery climbed to an intra-day high of $1,297.10.

In line with this trend, other precious metals too posted solid gains for last week. On Friday, Silver advanced by 0.03% to trade around $ 19.45. Meanwhile, Platinum moved up by 0.69% to trade at $ 1,422.65, while, Palladium tracking this rally edged up by 0.03% to $ 747.30.

Last week, Gold initially declined affected by Bernanke’s comments that Fed might possibly scale back the asset-purchase policy by this year end. But, later Bernanke said that the Fed is not looking to immediately raise the short-term interest rates on a scale back. This assured the investors that the Fed will make a gradual pullback from its bond-purchase policy causing effects on the markets.

Furthermore, Bernanke assured that the scale back depends on more positive economic data from the US and is not a preset timetable. Also, the Tokyo’s Gold futures gained backed increased physical purchase in Asia. This assurance calmed the markets and helped Bullion to pare back its previous losses as it climbed up to post weekly gains on last Friday.

Starting this week, on Monday, Gold extended its gains and reached to a one month high of $1,317.30 an ounce. This is bullion’s highest since June 20 and it later settled down to $1,314.64 an ounce by 0341 GMT on the same day. Meanwhile, the US Gold Futures surged by 1.69 % to $1,314.80 an ounce and the Spot Gold prices gained as much as 2.1% to $1,323.23 an ounce.

Tracking the Gold price trend, other precious metals too extended their rally into this week. The White metal rose by 2.44% to trade around $19.98. On the other hand, Platinum edged up by 0.59% to $1,438.55, with Palladium inching up by 0.09% to $ 750.70 to post marginal gains. As of today, Gold further extended its rally as it rose by 0.1% to trade around $1,336.84 by 0332 GMT supported by technical buying among investors.

This week’s rally in Gold seems to have been supported by Bernanke’s U-turn statement on the second day of his testimony in Congress last week. Bernanke in his second day testimony indicated that with the inflation well below the Fed’s target of 2%, the pullback in monetary policy by September is little unlikely. This comment from the Fed Chairman pulled down the Dollar and boosted the Gold prices. 

Moreover, the Japanese PM Abe’s electoral promise was to fight deflation by increasing inflation to 2% and to continue his aggressive monetary stimulus policy to further improve economic growth. Now, Abe’s coalition government has won the Sunday upper house election, which is bearish for Yen in the long run. Since Yen is the traditional safe haven currency investors will again seek Gold as an alternative to hedge against inflation.

However, the outflows from the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, though had slowed down, were still persistent. The assets in the SPDR Gold Trust fell by 0.7 percent last week. This signals that Bullion is yet to make a full recovery from its decline after being boosted by the previous three QE schemes of the US Federal Reserve. So, the further rally depends on a more firm timetable for QE scale back from the Fed.

Note: This blog is just an expression of the author’s opinion and cannot be deemed responsible for any losses incurred.