In yesterday's gold news, gold price rose on speculation that demand will increase when jewelry prices end a five day shut down in India. India is the world's largest buyer of gold and currently, jewelers in India are protesting tax increases that were announced by the government last week.
By Debarati Roy
Mar 21, 2012 11:58 AM MT
Gold rose on speculation that demand will increase when jewelry shops end a five-day shutdown tomorrow in India, the world’s largest buyer, and as Federal Reserve Chairman said higher oil prices may stoke inflation.
Jewelers are protesting tax increases the government announced last week that may raise retail-gold prices by 6.3 percent. There may be pent-up demand from the closures, Edel Tully, an analyst at UBS AG in London, wrote today in a report. Rising fuel prices “create at least short-term inflation pressures,” Federal Reserve Chairman Ben S. Bernanke said today during congressional testimony.
“We will see a rise in demand in the short term because of India coming back to the market,” Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago, said in a telephone interview. “Bernanke’s statements were gold friendly.”
Gold futures for April delivery rose 0.2 percent to settle at $1,650.30 an ounce at 1:37 p.m. on the Comex in New York. The metal, which reached an eight-week low of $1,634.70 on March 14, has rallied 5.3 percent this year.
Retail-gasoline prices have jumped 18 percent this year to a 10-month high of $3.864 a gallon yesterday, AAA data show. Higher fuel costs “act as a tax on household purchasing power and reduce consumption spending, and that also is a drag on the economy, the Fed chief said in answer to questions from the House Committee on Oversight and Government Reform.
In his prepared testimony focused on the European sovereign-debt crisis, Bernanke told Congress that Europe must further strengthen its banks and that its financial and economic situation ‘‘remains difficult,’’ even as stresses have declined.
‘‘This may result in additional forms of European quantitative easing, and that is supportive of gold,’’ Phil Streible, a senior commodity broker at R.J. O’Brien & Associates in Chicago, said in a telephone interview.
Silver futures for May delivery gained 1.2 percent to $32.227 an ounce on the Comex. Prices are up 15 percent this year.
On the New York Mercantile Exchange, palladium and platinum retreated for the second straight day. Palladium futures for June delivery slid 1.2 percent to $688.65 an ounce. Platinum futures for April delivery declined 0.8 percent to $1,640.40 an ounce. The metal, up 17 percent this year, is still the best performer among the precious metals in 2012.
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