Gold at three-week high following negative U.S. data and Bernanke remarks

Gold hit a new three-week on Wednesday following the release of Ben Bernankes remarks prior to his testimony to Congress. Negative U.S. data also weighed on the dollar, supporting gold.

On the Comex division of the New York Mercantile Exchange, gold futures for August delivery traded at $1 297.05 per troy ounce at 14:06 GMT, up 0.52% on the day. Prices ranged between a recently hit session high at $1 297.85 an ounce, highest level since June 24, and days low at $1 282.35. The precious metal has advanced 0.76% so far this week, after surging 5.09% the previous one, but market players remained cautious ahead of Bernankes two-day testimony.

Federal Reserve Chairman Ben Bernanke said in prepared remarks before his statement before Congress that the central banks bond purchasing program is not on a “preset course” and reiterated his opinion from last week that the U.S. economy still needs an accommodative monetary policy in the foreseeable future.

“I emphasize that, because our asset purchases depend on economic and financial developments, they are by no means on a preset course,” Bernanke said. He also stated that the easy money supply may be maintained longer and the bond purchases may even be increased, if the situation worsens and the economic recovery requires it.

This sent the dollar falling, erasing earlier daily gains and boosting commodities. The dollar index, which tracks the greenbacks performance against six major counterparts, traded at 82.58 at 13:45 GMT, down 0.05% on the day, after falling to as much as 82.48 at 13:08 GMT. The U.S. currency gauge has declined 0.62% so far this week after closing 1.87% lower the previous one.

The U.S. dollar was also pressured by negative U.S. economic data, released at 12:30 GMT. Building Permits mismatched projections of a 1 million increase in June, standing well below at 0.911 million. This was also worse than Mays downward revised reading of 0.974 million.

Meanwhile, Housing Starts indicator also disappointed. Building of new homes contracted by 9.9% in June, standing at 0.836 million, the lowest since August 2012, compared to Mays downwards revised reading of 0.914 million. Expectations were for an increase of 0.950 million new houses.

Ben Bernankes testimony to Congress remains in investors focus after several Fed Presidents stated different opinions about the future of the central banks Quantitative Easing program.

St. Louis Federal Reserve President James Bullard said on July 12 the U.S. central bank shouldn’t taper its monetary easing program until inflation reaches its target.

Meanwhile, Philadelphia Fed President Charles Plosser said the same day exactly the opposite. He stated Fed should trim its bond purchasing in September and bring it to an end by the end of the year. Yesterday, Kansas City Fed President Esther George said the central bank should start reducing its bond purchasing program soon and bring it to an end by mid-2014. “The important thing is to start the process,” George said. She also noted that the economy would benefit from higher interest rates.

Meanwhile, market players will also be keeping an eye at the remaining U.S. economic data for the week. The Labor Department will release Initial Jobless Claims on Thursday. The number of people who have filed for unemployment payments is expected to have dropped by 20 000 to 340 000 after last week an unexpected surge to 360 000 supported Bernanke’s statement that the U.S. labor market is still fragile. The Philadelphia Fed Index is also to be released on Thursday with expectations for a poorer performance, compared to the previous reading.

Elsewhere on the precious metals market, silver and platinum gained on the day, while palladium marked a slight daily loss. Silver for September delivery traded at $20.033 an ounce at 14:02 GMT, up 0.49% on the day. Prices held in range between days high and low of $20.133 and $19.650. Platinum October futures marked a new daily high at $1 431.15 per ounce at 14:04 GMT, up 0.42% on the day. days low was at $1 416.80. Meanwhile, palladium for September delivery lost 0.05% on the day, trading at $735.20 per ounce. Prices held in range between days high and low of $736.00 and $730.10 per ounce respectively.