Los Angeles – The Gold price gained 0.53 percent to $1,355.70 an ounce to close higher for a second consecutive week as silver rose 2.89 percent to close the week at $29.89 an ounce. The Gold/Silver ratio, dropped to 45.36 as silver outperformed gold.
The week began with an announcement by J.P. Morgan Chase on Monday that it will be accepting physical gold bullion as collateral with its counterparties, in order to meet demands of clients seeking to use physical gold as a hedge against inflation. J.P. Morgan Chase will become the only tri-party collateral manager worldwide that accepts physical gold as collateral for securities lending and repo obligations with counterparties. An increasing number of global investors are protecting their wealth by investing in physical Gold and J.P. Morgan’s decision is a testament to the trend.
Gold prices rallied almost 1 percent on Tuesday, following China’s interest rate hike on the last day of the Lunar New Year celebration reinforcing global fears of rising food and energy prices. China’s surprise move initially prompted the selling of gold, as it did when China last raised its rates on Christmas Day but the gold price recovered and closed the day on nearly a three week high. “Gold has continued its uptrend since it has broken above its down trend-line from the January high, and it has gotten through the 20-day moving average which was held for several days,” said Rick Bensignor, chief market analyst at Dahlman Rose.
Fed Chairman Bernanke testified before the House Budget Committee on Wednesday, and cautioned lawmakers that “with output growth likely to be moderate for a while and with employers reportedly still reluctant to add to their payrolls, it will be several years before the unemployment rate has returned to a more normal level.”
Bernanke stopped short of his statement on February 4 that the job market could take “four to five more years” to return to normal. He did however say that, “although the growth rate of economic activity appears likely to pick up this year, the unemployment rate probably will remain elevated for some time.” When unemployment rose above 9 percent in May 2009, it began the longest period of joblessness in America at that level or higher since 1948.
Following almost three weeks of protests on the streets of Cairo, 30 years of autocratic rule by President Hosni Mubarak ended Friday. Gold bullion prices remain well supported by an increase in safe-haven demand after Mubarak’s resignation and the recent uprising in Tunisia that saw the removal of President Ben Ali in January. Egypt’s military is at its highest state of alert in almost 40 years, since the 1973 war between Egypt and Israel.
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