Federal Reserve Chairman Ben Bernanke gave his testimony about the economy before Congress today. He renewed his pledge to protect the U.S. economy from the European financial crisis. Bernanke explained, “We are in frequent contact with European authorities, and we will continue to monitor the situation closely and take every available step to protect the U.S. financial system and the economy.”
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After last week’s better-than-expected unemployment report, many expected Bernanke to address the report as a sign of an improving economy. However, the report did not even make an appearance in Bernanke’s testimony, leading many to believe that Fed stimulus is here to stay. Bernanke also continues to avoid taking another quantitative easing program off the table. “We are showing a quite strong rally in the gold market” as Bernanke’s statements continued to indicate more monetary easing “and also on hopes for Greece,” said Jim Steel, a precious metals analyst with HSBC in New York.
Despite heading lower in morning trading, precious metals performed an about-face after Bernanke started talking. In afternoon trading, the SPDR Gold Trust (NYSEARCA:GLD) climbed 1.6 percent, while the iShares Silver Trust (NYSEARCA:SLV) gained almost 2 percent. Gold miners such as Goldcorp Incorporated (NYSE:GG) and Barrick Gold (NYSE:ABX) increased .80 percent and .55 percent, respectively. First Majestic Silver (NYSE:AG) and Endeavour Silver (NYSE:EXK) both gained about 1.5 percent.
The U.S. dollar (NYSE:UUP) also declined as the euro climbed to its highest level in two months. Prime Minister Lucas Papademos was in talks with the European Union and International Monetary Fund officials into the early hours of Tuesday morning, in an attempt to secure a new international bailout and avoid default.
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Greece’s lenders are demanding the nation accept painful reforms in exchange for a second, 130 billion-euro bailout. Papademos meets today with party leaders to discuss the reforms, and is reportedly preparing a text to put to them for their approval.
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