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Ammon News - SINGAPORE — Gold jumped to its highest level in more than two weeks on Thursday after Federal Reserve chairman Ben Bernanke said the US central bank would continue its accommodative monetary policy for now to support the economy.

That marks bullion’s fourth day of gains in its longest winning streak since mid-April, pushing prices of other precious metals and US gold futures to multiweek highs.

Gold, which is still down about 25% in 2013, had taken a beating after Mr Bernanke said in May and June that the Fed could begin tapering its bond purchases later in 2013.

But comments from him on Wednesday suggested that stimulus could last longer, supporting prices of gold as it is typically seen as a hedge against inflation.

"Bernanke was quite dovish in his comments. Maybe we won’t see a pullback in quantitative easing as quickly as we anticipated," Nomura Securities analyst Amber MacKinnon said in Sydney.

"We are likely to see a short-term rally in gold up to around $1,400 and then a fallback to current levels."

Spot gold had risen 2% to $1,289.49 an ounce by 6.38am GMT. It earlier climbed 2.7% to $1,298.36 — its highest since June 24.

Comex gold jumped as much as 4% to a two-and-a-half week high of $1,297.2. Spot silver climbed 4.8% to $20.26 — its highest in three weeks.

Platinum and palladium jumped to three-week peaks.

Spot gold could break a resistance zone of $1,294-$1,302 an ounce and rise more to $1,331, said Reuters technical analyst Wang Tao.

Caution persists

But traders said there was lingering uncertainty over the outlook for Fed stimulus.

"People are cautious. They don’t really know what to do as just recently gold fell to a three-year low on tapering comments from the Fed and now they are saying the opposite," said a trader in Hong Kong.

Mr Bernanke on June 19 said the US economy was expanding strongly enough for the Fed to begin scaling back its stimulus from September 2013 and end the measures by mid-2014.

Physical demand in key markets India and China has been subdued, different from the rush to buy in April when prices dropped about $200 in two days. A near-term rally in spot prices could further hit demand.

Reuters