Gold and Silver Climb Higher Ahead of Bernanke’s Testimony


On Tuesday, gold (NYSEARCA:GLD) futures for August delivery increased $6.90 to close at $1,290.40 per ounce, while silver (NYSEARCA:SLV) futures for September increased 10 cents to finish at $19.94.

Both precious metals edged higher as inflation in June was higher than expected. The consumer price index gained a seasonally adjusted 0.5 percent last month, the biggest jump since February, according to the U.S. Bureau of Labor Statistics. Economists expected inflation to increase 0.3 percent.

Consumer prices have advanced 1.8 percent over the past year. In comparison, they increased 1.4 percent for the 12 months through May. About two-thirds of the increase was due to a spike in gasoline prices, up 6.3 percent on the month and 2.8 percent on the year. Overall, energy prices climbed 3.4 percent on the month and are up 3.2 percent on the year. Food prices climbed 0.2 percent on the month and 1.4 percent on the year.

The U.S. dollar index, which compares the greenback in a basket against six other flat currencies, declined about 0.6 percent. Many analysts expect Federal Reserve Chairman Ben Bernanke to reiterate his “highly accommodative” stance in Washington, D.C., on Wednesday.

Christopher Vecchio, currency analyst at DailyFX, said: “Fed Chairman Bernanke will take to Capitol Hill on Wednesday and Thursday for his semiannual Congressional testimony on the state of the U.S. economy and monetary policy. In what could very well be his last testimony as Fed overseer (his term expires in January), Chairman Bernanke will retain his recent bias as exhibited most recently at the June 19 policy meeting and last Wednesday’s comments at a conference in Boston: the U.S. economy is doing good, not great; the labor market has improved but isn’t where it should be; and U.S. monetary policy needs to remain accommodative in the face of restrictive fiscal policy.”

In afternoon trading, shares of the SPDR Gold Trust (NYSEARCA:GLD) gained about 0.5 percent while the iShares Silver Trust (NYSEARCA:SLV) traded flat. However, gold miners (NYSEARCA:GDXBarrick Gold (NYSE:ABX) and Yamana Gold (NYSE:AUY) both jumped more than 5 percent. First Majestic Silver (NYSE:AG) shares popped 4.9 percent.

Follow Eric on Twitter (@Mr_Eric_WSCS)

If you would like to receive professional analysis on miners and other precious metal investments, we invite you to try our premium service free for 14 days.

Disclosure: Long EXK, AG, HL, PHYS