Gold en route to best week since October

Gold fell during the early European session but is still headed for its best week since October as Fed Chairman Ben Bernanke said on Wednesday the U.S. economy still needs the central banks accommodative monetary stimulus, deferring its imminent deceleration.

On the Comex division of the New York Mercantile Exchange, gold futures for August delivery traded at $1 275.75 per troy ounce at 8:33 GMT, down 0.32% on the day. Prices held in range between days high and low of $1 287.05 and $1 274.05 an ounce respectively. The precious metal marked daily gains throughout the week and has advanced 4.3% so far, the best weekly gain since October 2011.

The precious metal fell 23% last quarter, falling to as much as $1 180 per ounce in the end of June after Bernanke pointed after the FOMC June meeting at an imminent scaling back of the monetary stimulus and an end to it by mid-2014. Assets in the SPDR Gold Trust, the biggest bullion-backed ETP, dropped to 939.75 metric tons on July 9, the lowest since February 2009.

Gold surged this week as the U.S. dollar plunged following the released minutes from the latest FOMC meeting on Wednesday, after which Ben Bernanke made and announcement in Boston. Assets in the SPDR Gold Trust remained unchanged on Thursday after falling for four straight days as the metal rebounded. The dollar index retreated from a three-year high and plunged to the red scale as the protocols from the FOMC’s June meeting showed that policymakers were divided in their opinion about the future of Quantitative Easing. Around half of them believe the central bank should start winding down bond purchasing by the end of the year, while the rest think the labor market remains weak, citing the latest Unemployment Rate reading.

Later on, Ben Bernanke dampened investors’ speculation for an earlier than expected deceleration of Fed’s monetary easing program. He said the U.S. economy needs Fed’s accommodative monetary easing program over the near-term as while the manufacturing sector, housing industry and other sectors from the industry have improved, the latest 7.6% unchanged reading of the Unemployment Rate pointed at a fragile labor market. Meanwhile, inflation remained stable and low, giving the central bank more room to ease money supply.

Alexandra Knight, an economist at National Australia Bank Ltd., said for Bloomberg: “The FOMC minutes confirmed they’ll keep the stimulus. Expectations are for tapering not to occur quite as quickly as was previously anticipated.”

Feds intentions to keep the Quantitative Easing program intact for now was backed by yesterdays negative U.S. jobless data. The U.S. Labor Department said on Thursday that Initial Jobless Claims rose to 360 000 in the week ending June 6, the highest level in two months, well above the previous periods revised reading of 344 000 and mismatching expectations of a drop to 340 000. The less volatile four-week moving average rose by 6 000 to 351 750. This is the first time since June the indicator rose above 350 000.

Meanwhile, Junes Import Price Index rose by 0.2% on annual basis, compared to a drop of 1.9% in June 2012, but below projections of a rise to 0.4%. On a monthly basis, import prices declined by 0.2%, mismatching projections of surging to 0.0% after Mays reading showed a 0.7% decline.

Elsewhere on the precious metals market, silver, platinum and palladium are also marking daily gains after gaining on Thursday. Silver futures for September delivery traded at $19.755 per ounce at 8:31 GMT, down 1.01% on the day. Prices held in range between days high and low of $20.188 and $19.728 respectively. Platinum October futures fell 0.49% on the day, standing at $1 400.65 an ounce at 8:32 GMT. The metal ranged between daily high and low of $1 417.75 and $1 398.85. Palladium for September delivery traded at $716.70 per ounce, down 0.21%. Prices varied between days high and low of $724.10 and $715.70 respectively.