Gold and miner ETFs traded higher to end the week on speculation the Federal Reserve will announce more quantitative easing at its September meeting following a Friday speech by Fed chief Ben Bernanke.
The central bank chairman “left little doubt that he is looking toward doing more to give the economy a lift at the Fed’s next policy meeting in September,” reports noted Fed watcher Jon Hilsenrath at The Wall Street Journal.
SPDR Gold Shares (NYSEArca: GLD) rose 1.1% and Market Vectors Gold Miners (NYSEArca: GDX) gained 2.7% Friday morning after the text of Bernanke’s speech at Jackson Hole was released.
“As the Jackson Hole Economic Symposium comes into focus, the fresh batch of central bank rhetoric is likely to set the tone for September,” said David Song, Currency Analyst at DailyFX. “We may see the FOMC continue to endorse a wait-and-see approach at the September 13 meeting as the U.S. gets on a more sustainable path.”
Gold ETFs are sensitive to expectations of further stimulus by the Fed to juice the economy, as well as inflationary policies from the European Central Bank to fight the sovereign debt crisis.
“The world of monetary intervention has grown more in the last four years than in the preceding thirty since the conference’s founding in 1978. And given the macro outlook, it’s all but certain that Bernanke’s comments will revolve around the past execution of and future potential for monetary stimulus in a zero interest rate environment,” said Janney Capital Markets analysts in a Jackson Hole preview note.