Gold was heading for one of its better weeks in recent months as feverish analysis of Ben Bernanke’s comment on Wednesday concluded they were probably worse for equity markets.
The spot gold price was trading slightly lower today at US$1,389.18, but shares headed lower for a second day as investors took stock of the Federal Reserve chairman’s comments.
Bernanke said the Fed could start to scale back its current quantitative easing programme in the next few monthly meetings, but ge added plenty of caveats of which one was that any action would depend on the data in the meantime.
This morning St Louis Fed President James Bullard said inflation in the states would have to pick up before he would vote to scale back the current stimulus measures.
Macquarie Bank today said that gold was being helped by the physical demand coming through from Asia, especially in the face of heavy selling down of holdings in exchange traded funds.
SPDR Trust, the largest of the gold-backed ETFs, saw more heavy redemptions this week and Macquarie estimates 450 tons have now been liquidated from ETFs in total this year.
That is the equivalent of all of the production from South Africa and Australia over the same period said the Aussie bank.
It added that the only reason that the gold price has not fallen further is due to the retail demand for coins, bars and jewellery.
"If ETFs continue to leach gold - and despite the outflows, over 2,200 tonnes remain - then gold's price outlook will depend on these retail buyers," it said.
Elsewhere, silver was down slightly at US$22.48, while platinum edged up to US$1,459 as there seems no quick resolution in sight to the current wage negotiations in South Africa.
Major movers
Randgold Resources flat at 5,030p
Fresnillo flat at 1,080p
Anglo American down 8.50p at 1,561.5p