Gold exchange traded funds rose more than 1% on Monday to test the 50-day exponential moving average after Federal Reserve Chairman Ben Bernanke said the U.S. economy needs to grow faster to reduce the unemployment rate.
Traders bid gold higher on speculation the central bank may need to unveil further quantitative easing to boost the economy.
Gold is trying to get back above $1,700 an ounce. Holdings in bullion-backed exchange traded products such as SPDR Gold Shares (NYSEArca: GLD), iShares Gold Trust (NYSEArca: IAU) and ETFS Physical Swiss Gold Shares (NYSEArca: SGOL) hit a record on March 13, according to Bloomberg.
The precious metal funds were up about 6% year to date heading into Monday’s action. [Strategist: Why Gold ETFs Still Make Sense]
The U.S. dollar was weaker Monday morning following Bernanke’s comments.
“The market is reacting to Bernanke’s comments, as it brings the back specter of QE3,” Frank McGhee, head dealer at Integrated Brokerage Services, told Bloomberg News. “If you end up with any type of stimulus, that will benefit all metals.”
SPDR Gold Trust
Full disclosure: Tom Lydon’s clients own GLD.