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Gold Tallies Seven-Session Gain of Nearly $103; Silver Up 7% On Day

By Myra P. Saefong and Virginia Harrison, MarketWatch

SAN FRANCISCO (MarketWatch) — Gold futures climbed more than $23 an ounce Wednesday to close at a record level as European debt contagion fears and the U.S. Federal Reserve’s hints at further economic stimulus fed investment demand.

“Inflation and deflation have now been slugging it out for over a decade, and physical gold remains an obvious, sensible refuge for private savings caught in the middle,” said Adrian Ash, head of research at Bullionault.com, an online service for gold-bullion trading and ownership.

“A European debt-default, plus QE3 in the States, would make the perfect storm yet again,” he said, referring to the potential for a third U.S. round of quantitative easing.

Gold for August delivery GC1Q -0.12%  added $23.20, or 1.5%, to $1,585.50 an ounce on the Comex division of the New York Mercantile Exchange.

Prices, which marked their highest nominal settlement price, have now tallied a gain of almost $103 during a winning streak that, so far, has spanned seven sessions.

untested means to stimulate growth if conditions deteriorate, including another round of asset purchases, dubbed QE3, Fed Chairman Ben Bernanke said Wednesday in remarks prepared for the House Financial Services Committee. Read more of Bernanke’s remarks.

Bernanke’s comments “hint at inevitable emergency techniques in the face of various treasury-auction situations and credit-rating events,” said Richard Hastings, a macro strategist at Global Hunter Securities. So, “the tone is growing darker and gold, of course, is lighting up against this ominous background.”

The gains among the metals were strongest for silver Wednesday, with the September contract SI1U +0.24%  adding $2.52, or 7.1%, to finish at $38.15 an ounce.

Futures prices haven‘t closed above $38 since May 31 and analysts said silver is likely playing catch up with gold’s strength.

Brien Lundin, editor of Gold Newsletter, said Bernanke’s statement, in response to questioning from Congressman Ron Paul, that gold is not money “reveals either intellectual ignorance or arrogance — or both.”

“The rise in gold since [Bernanke] has taken office is a direct result of his accommodative monetary policies, and to confirm or pretend ignorance of this fact shows investors that he’s really not concerned with how high gold may go in reaction to his policies,” Lundin said.

Posted on July 15, 2011 at 2:40 pm in Uncategorized   |  RSS feed |   Reply   |   Trackback URL