Gold Prices Jump 1.4% to New Record after Bernanke Testimony

Chris Mullen of GoldSeek.com wraps up Wednesday's action...

Gold Prices jumped to a new record high of $1587.59 per ounce by late Wednesday morning in New York before stabilizing in the last couple of hours of trade, going on to close with an impressive gain of 1.4%.  

Euro Gold Prices rose to a new record high at about €1121 per ounce.

Silver Prices soared to as high as $38.303 before they also moderated a bit in late trade, but they still ended with a gain of 6.6%.

Gold and silver equities rose about 4% by late morning and remained near that level for the rest of the day.  The XAU, HUI, and GDM sit about 6% below their all-time highs of April 8th 2011.

Platinum gained $21.75 to $1754, and copper rose slightly to about $4.39.

Oil rose after the Energy Information Administration reported that crude inventories fell 3.1 million barrels, gasoline inventories fell 800,000 barrels, and distillates rose 3.0 million barrels.

The US Dollar index fell markedly on Federal Reserve chairman Ben Bernanke's testimony before the House Financial Services committee that sent the Dow, Nasdaq, and S&P over 1% higher for most of the day, but all three indices faded in late trade and ended only slightly higher.  

Bernanke said on Wednesday the central bank is ready to ease monetary policy further if the economy weakens and inflation moves lower, hinting policymakers were actively mulling further stimulus.

While holding to a view that recent economic softness would eventually pass, he appeared less confident in that projection – and more willing to entertain the possibility of another round of stimulus.

"The possibility remains that the recent economic weakness may prove more persistent than expected and that deflationary risks might reemerge, implying a need for additional policy support," Bernanke told the House of Representatives Financial Services Committee.

The federal budget deficit is on pace to break the $1 trillion mark for the third straight year, ratcheting up the pressure on the White House and Congress to reach a deal to rein in spending.

The deficit totaled $971 billion for the first nine months of the budget year, the Treasury Department said Wednesday. Three years ago, that would have been a record high for the full year.

With three months to go, this year's deficit will likely top last year's $1.29 trillion gap, according to an estimate by the Congressional Budget Office. But it is expected to come in below the record $1.41 trillion reached in 2009. The budget year ends Sept. 30.

US Treasuries closed up after Wednesday's $21 billion 10-year note auction drew a high yield of 2.918% with a bid to cover of 3.17.

Among the big names making news in the market were News Corp., Kinetic Concepts, Validus, JPMorgan, and Citigroup.

Thursday at 8:30am EST brings Initial Jobless Claims for 7/09 expected at 410,000, PPI for June expected at -0.2%, Core PPI expected at 0.2%, and Retail Sales for June expected at -0.2%.  Excluding autos, sales are expected at 0.0%.  At 10am is the Business Inventories report for May expected at 0.9%.  Bernanke will also be testifying before the Senate Banking Committee.

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