Gold hits new 16-month high on Bernanke's trade gap speech; also gains vs. Euro currencies

Spot Gold Prices shot to a new 16-month high as London trade drew to a close on Tuesday, touching $713 per ounce for the first time since mid-May 2006.

The 1% jump came after a slow session had seen the Gold Market move sideways – and it came against all major currencies, not just the Dollar.

By 17:00 in London, Gold Priced in Pounds Sterling had gained 1.2% for the day to finish above £351 per ounce, also a 16-month high.

For Eurozone investors wanting to Buy Gold Today, the metal came within 10 cents of €516 per ounce, nearly 1.5% higher from Monday's close in Frankfurt.

The major Western stock indices also rose on Tuesday, buoyed by expectations that the Federal Reserve will cut Dollar interest rates when it meets next Tuesday.

By lunchtime in New York, the S&P stood 0.6% higher, while the FTSE100 in London closed the day 2.4% higher – and the Pound also rose versus the Dollar – despite a much wider-than-expected UK trade deficit reported for July.

The US trade gap for July was also reported today, coming in very near to Wall Street's consensus forecasts at $59.25 billion.

Speaking in Germany, Ben Bernanke – chairman of the Federal Reserve – blamed the United States' growing debt to the world on "global imbalances", adding that "signs of progress have appeared but...most countries have only just begun to undertake the policy changes that will ultimately be needed."

The US administration in Washington, on the other hand, has yet to make any "policy changes" to help reduce the trade deficit. With a cut in the cost of borrowing Dollars now guaranteed next week, Bernanke's imbalance only looks certain to widen again.

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