http://af.reuters.com/article/metalsNews/idAFL6E8JV7L920120831
* Gold fell before rebounding $45, best monthly rise since
Jan
* Bullion looks set to resume bull run and to test 2012
highs
* Some contend conditions do not warrant new Fed stimulus
* Coming up: U.S. ISM manufacturing index Tuesday
(Recasts, adds details, graphic link, updates market activity)
By Frank Tang
NEW YORK, Aug 31 (Reuters) - Gold surged 2 percent in heavy
trading on Friday to a five-month high, and looked set to resume
its years-long rally after Federal Reserve Chairman Ben
Bernanke's key speech raised hopes of a new round of monetary
stimulus for the U.S. economy.
After trading in a range for four months, gold raced toward
the $1,700 an ounce level last seen in March. It looked poised
to test this year's high on improved investor sentiment and
technical buying. (Graphic: r.reuters.com/xuj42t)
Gold posted its biggest daily gain in two months, sharply
outperforming U.S. equities which edged up in late trade.
The metal posted a 4.5 percent gain in August, its third
straight monthly rise and its biggest since January.
In a speech to central bankers in Jackson Hole, Wyoming,
Bernanke spoke of "grave concern" about a stagnant labor market,
and said the economy faced "daunting" challenges. He stopped
short of saying the Fed was ready to buy government bonds in
another round of quantitative easing, or QE.
"The main catalyst for the reversal in gold has been that
Bernanke used the words 'grave concern' and the interpretation
is that there's going to be more QE if he's using such a dire
projection for the economy," said Jeffrey Sica, chief investment
officer of SICA Wealth Management, which has over $1 billion in
assets.
Gold fell immediately following the release of Bernanke's
speech, then quickly rebounded $45 per ounce, or almost 3
percent from its session low, as investors digested his comments
and concluded they were stimulus friendly.
Spot gold rose 1.8 percent at $1,685.89 an ounce by
3:15 p.m. EDT (1915 GMT) for its biggest one-day gain in two
months. It rebounded from a low of $1,646.73 an ounce.
It climbed to a session high of $1,691.80 an ounce, the
highest since March 27.
U.S. COMEX gold futures for December delivery settled
up $30.50 an ounce at $1,687.60, with the highest trading volume
in a month, preliminary Reuters data showed.
Year to date, gold is up 8 percent -- still off the 15
percent gain it notched in January when the Fed indicated it
might unveil new monetary stimulus and said it would keep
interest rates near zero until at least late 2014.
Since then, Bernanke's failure to hint at more easing had
prompted gold investors to reduce bullish bets and threatened to
end the metal's 11 consecutive years of bull rally.
Silver rose 3.5 percent to $31.46 an ounce.
ECONOMIC DATA, US ELECTION IN FOCUS
Other analysts contend the Fed may stand pat due to data
this week showing improved consumer confidence, consumer
spending and the Fed's Beige Book report showing a pickup in
retail activity.
In the absence of truly dire U.S. economic indicators, it is
unlikely that the Fed will launch any new easing before the U.S.
federal election, said Frank McGhee, head precious metals trader
of Integrated Brokerage Services LLC.
Other traders said the Fed could wait for next week's
nonfarm payroll report before reaching a decision on stimulus at
its September policy meeting on Sept. 12-13.
In the physical gold market, August sales of the U.S. Mint's
American Eagle gold coins are on track to be the weakest for the
month since 2007. Coin dealers, however, said business has
picked up late in the month.
Among platinum group metals, platinum was up 2
percent at $1,530.99 an ounce, while palladium rose 1.8
percent at $625.75 an ounce.
3:15 PM EDT LAST/ NET PCT LOW HIGH CURRENT
SETTLE CHNG CHNG VOL
US Gold DEC 1687.60 30.50 1.8 1647.10 1691.80 168,862
US Silver SEP 31.37 1.003 3.3 30.255 31.495 838
US Plat OCT 1537.30 33.60 2.2 1498.20 1541.10 8,818
US Pall SEP 627.95 13.05 2.1 617.00 629.00 423
Gold 1685.89 30.35 1.8 1647.73 1689.11
Silver 31.460 1.060 3.5 30.280 31.530
Platinum 1530.99 29.89 2.0 1501.50 1537.50
Palladium 625.75 10.95 1.8 609.75 627.25
TOTAL MARKET VOLUME 30-D ATM VOLATILITY
CURRENT 30D AVG 250D AVG CURRENT CHG
US Gold 177,280 145,320 183,664 17.09 -0.02
US Silver 53,652 49,147 52,958 27.05 -0.43
US Platinum 9,467 14,622 9,172 23.5 0.36
US Palladium 4,281 7,167 4,633
(Additional reporting by Jan Harvey in London; Editing by
Marguerita Choy, Sofina Mirza-Reid and David Gregorio)
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