Gold prices were nearing one-week highs on Tuesday as the
chances of a rate hike by the Federal Reserve this year diminished after a string of disappointing economic data.
Comex gold futures for December delivery were swinging between small gains and losses, and were last at $1,139.10 an ounce, not far from Monday’s highs of $1,141.7.
Comex silver for December delivery was at $15.69, close to Monday’s three month highs of $15.68, and copper for December delivery also lost 0.11% to trade at $2.353 a pound.
On Friday the yellow metal rallied, jumping 2.1%, the largest one day gain since
January after data showing the U.S. economy added far fewer jobs than
expected in September. Traders now generally suppose a rate lift-off will not come before March 2016.
Meanwhile, the marketplace received fresh comments from Ben Bernanke, ex-Federal Reserve chair, about current monetary policy of the U.S. central bank. Most of what Old Ben said was supportive.
“[The Federal Reserve] has a 2 percent inflation target. It needs to get inflation up to that target,” Bernanke said. “Easy money is justified by the need to get inflation up to the target.”
Bernanke agrees that the economy cannot work as a two-legged stool.
“The Fed has been using easy money because the economy has needed a lot of support,” he stated emphatically. “A better policy would be a better mix of monetary, fiscal, and other policies. The fact that the Fed is the only game in town means the Fed has to do too much.”
The ex-Fed chair also cited low inflation and disinflation as realistic dangers. The economy needs more, not less, liquidity. The Fed is at the
end of its tether now.