Gold has surged more than $30 today and is currently trading at $1327. Last week Ben Bernanke of the Federal Reserve stated that US monetary policy is not set in stone and that the bond-buying programme will be in place for the foreseeable future. This statement put pressure on the US dollar and, as gold is listed in dollars, it made it relatively cheaper to buy and thus led to an upward move in the price.
Mr Bernanke’s comments not only weakened the dollar but also reminded investors that the recovery in the US economy is not over. This fact was highlighted by Detroit filing for bankruptcy, pushed by the declining automotive industry in the US. While the economy is in recovery mode we could see gold push higher. Gold is perceived to be a quality investment, so if dealers are worried about riskier assets they often invest in gold.