Gold Headed for Third Straight Monthly Gain, Bernanke Unlikely to Give Clear Signal

Gold bullion prices stayed close to $1,660 per troy ounce Friday morning in London, slightly lower than the start of the week, as stocks gained and US Treasuries sold ahead of today’s anticipated speech by Federal Reserve Chairman Ben Bernanke and the Labor Day holiday in the US.

Silver bullion gained to $30.67 per troy ounce, also slightly lower than the close last week, as other commodities were generally flat.

Per the London gold fix, gold bullion prices are set for a third straight monthly gain as of London noontime, trading around 2.3 percent higher than the final July gold price fix.

Priced in sterling, gold is set for a 1 percent gain on the month. In euros, gold traded slightly lower than last month’s price during Friday morning trading.

Credit Suisse analyst Tobias Merath echoes sentiment from many investment houses and firms, saying that a cautious approach to the gold market has been adopted. For a break above technical resistance at $1,700 per troy ounce, Merath sees a need for expectations for monetary easing from the Fed to be fulfilled.

At a conference of central bankers being held this weekend in Jackson Hole, Wyoming, Bernanke is scheduled to deliver a speech today. Markets and investors will watch the speech keenly for hints to the central bank’s stance on further easing.

Barclays has said in a note that they believe Bernanke will avoid sending a clear signal about the Fed’s intentions regarding easing, preferring to wait instead for the September meeting of the Federal Open Markets Committee.

Disappointment from the move could have a modest negative effect on risk appetite in the coming days, according to Barclays.

Chief US economist at JPMorgan, Michael Feroli, echoes the sentiment, pointing out Bernanke is less inclined to front-run the Committee when it meets in less than two weeks.

In Europe, the European Commission has proposed the European Central Bank be given supervisory authority over all Eurozone banks, a move away from such powers being retained by national bodies, as reported by the Financial Times.

Following the Jackson Hole Summit, the situation in Europe is likely to take a more center stage as the ECB meets next week in order to discuss monetary policy.

Recently, extremely high costs of borrowing in both Italy and Spain have prompted investors to call for some kind of intervention from the ECB.

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