Gold trade stabilizing after Friday speeches
This morning saw gold slip down to $672.30/673.10 an ounce on the New York Mercantile Exchange, but the marginal drop was not enough to dent positive feeling about the resilience of the gold trade.
Today's decrease in price was not far enough from the three-week high of $674.30 achieved last Friday (August 31st) to cause concern, with many pointing to the stabilizing effect of indications from the Federal Reserve.
Ben Bernanke stated an unwillingness to rescue those who had made unwise investments, but by failing to mention inflation control as a priority, the Fed chairman's Friday speech fuelled hopes of an easing of credit through a cut in the Federal Funds Rate.
Tatsuo Kageyama, analyst at Kanetsu Asset Management, told Reuters that while the sub-prime problem remained, "the Fed clearly relieved the market, which helped lift gold".
Precious metals are often seen as a safe-haven investment at times of stock market trouble, a tendency seen by Kageyama to be highly relevant to gold in the current situation.
"We've seen volatility in financial markets, but investors are aware of the fact that gold has been solid during the time, so they are willing to buy gold on dips," he said.
Speaking on the same day as Mr Bernanke, President Bush also addressed problems in the US economy, hoping to calm the market by promising the possibility of refinancing into government-insured mortgages help for struggling sub-prime mortgage borrowers.