Gold held comfortably in its recent range after a widely awaited speech by US Federal Reserve chairman Ben Bernanke failed to move the market. Traders had expected Bernanke to offer some fresh clues about likely direction of US interest rates in his speech Jackson Hole, Wyoming at 1400 GMT, but he chose not to comment on rates.
Dealers had said that any suggestion the Fed's two-year credit-tightening cycle had come to an end might spur selling in the dollar. A weaker dollar makes dollar-priced gold more attractive to buy for holders of other currencies. "Gold moved out of its range overnight, then quickly moved back into it," a London trader said after the Fed chairman's remarks.
"The market is very comfortable with $624 (per ounce) as a pivot point." Business was quiet and volumes thin on the last trading day before a three-day weekend in Britain, he said. Spot gold was quoted at $620.50/622.00 per ounce at 1418 GMT, up very slightly from $620.30/621.05 late in New York on Thursday.
In the absence of fresh news, conflicting forces are cancelling each other out and leaving gold stuck in a range. Gold is supported by high oil prices and the threat of a hurricane hitting the US Gulf, and at the same time dragged down by US housing data that indicate the risk of inflation is decreasing, said Peter Fertig, director of FX and commodity strategy at Dresdner Kleinwort, in a note. Gold is often bought as hedge against inflation.
"This market continues to go nowhere in a hurry as the contracting range of the last month grinds on. After such prolonged inactivity we are not expecting the price to explode into life again until the vacation season has ended," said technical analysts at Barclays Capital.
Silver seemed to be losing some strength after rising as far as $12.59 an ounce on Thursday. Spot silver was quoted at $12.27/12.37 an ounce, unchanged from New York. Silver, mainly used in jewellery, photography and electronics, rose to its highest since May 31 at $12.66 an ounce on Wednesday. In other precious metals, platinum fell to $1,219/1,226 an ounce from $1,227/1,232 late in New York. Palladium was down slightly at $340/346 an ounce.
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