Gold Gains as Dollar Falls After Bernanke Signals Rates Cut

Gold Gains as Dollar Falls After Bernanke Signals Rates Cut
By Feiwen Rong
Source: http://www.bloomberg.com/apps/news?pid=20601091&sid=aF88GAhnvpZQ&refer=india

Feb. 15 (Bloomberg) — Gold rose in Asia after U.S. Federal Reserve Chairman Ben S. Bernanke signaled more cuts to interest rates, boosting the precious metal’s investment appeal compared with other dollars-denominated assets.

The dollar fell and is headed for the biggest weekly loss against the euro. Gold rallied 31 percent last year after the Federal Reserve cut borrowing costs to thwart a recession, sending the dollar 9.5 percent lower against the euro.

“There’s expectations for further rates cut and there’s ample liquidity of paper money, so that’s all positive factors for gold,” Cai Zhenwei, a trader at Bank of China Ltd., said by telephone in Shanghai.

Gold for immediate delivery climbed as much as $2.87, or 0.3 percent, to $911.08 an ounce and traded at $910.13 at 10:35 a.m. Singapore time. Silver rose 0.3 percent to $17.31 an ounce at the same time.

Gold for April delivery gained as much as $2.70, or 0.3 percent, to $914.30 an ounce at 10:05 a.m. Singapore time in after-hours electronic trading on the Comex division of the New York Mercantile Exchange.

The U.S. currency traded at $1.4637 per euro at 10:03 a.m. in Tokyo, from $1.4643 in New York late yesterday and $1.4504 late last week.

Gold for December delivery on The Tokyo Commodity Exchange fell 22 yen, or 0.6 percent, to 3,173 yen a gram ($915 an ounce) at the 11:00 a.m. local-time break.

Gold for June delivery on the Shanghai Futures Exchange added 0.3 percent to 215.78 yuan a gram ($934 an ounce).

The prospect of further production loss in South Africa because of power shortages also helped gold prices, Cai said.

Power cuts shut most of South Africa’s mines for five days last month. South Africa was the world’s second largest gold producer last year after China, London-based research firm GFMS Ltd. said in a January report.

To contact the reporter for this story: Feiwen Rong in Singapore at frong2@bloomberg.net

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