Dollar gains on Bernanke comments as gold soars

NEW YORK: The dollar rose against the euro and yen on Thursday after US central bank Chief Ben Bernanke ruled out an imminent round of monetary easing, as gold soared to record highs amid global uncertainty.

The dollar was trading at $1.4141 against the euro in New York at 2100 GMT on Thursday, compared to $1.4153 at the same time on Wednesday.

It also gained slightly against the Japanese yen, rising to 79.13 yen from 78.99 yen a day earlier.

The greenback got a boost after Bernanke told Congress that the Fed was not ready for a new round of quantitative easing, which has the effect of reducing the dollar's value by increasing the money supply.

On Wednesday, the Federal Reserve chairman had indicated that further easing was possible if economic weakness persisted, fueling a stock-market rally as investors hoped for a new round of stimulus from the Fed.

"It's normal for the central bank to send the message that there is room for manoeuvre to help the economy. It's astonishing that the market interpreted this as a fact that a third round of quantitative easing was a possibility," said Charles St-Arnaud, an analyst with Nomura.

Both the dollar and the euro have been shaken in recent days by doubts about sovereign debt, with the US government trying to avert a default as politicians in Washington bicker over raising the debt limit, and eurozone leaders seeking to prevent the Greek debt crisis from spreading.

The price of gold, a traditional safe-haven asset, surged to a new record on Thursday, reaching $1,594.45 per troy ounce on the spot market in New York.

"The sovereign debt crisis may have originated from Greece but it is now spreading its tentacles throughout the Western world," Forex.com research director Kathleen Brooks told AFP.

"We are in the midst of what could be a large re-pricing of sovereign risks (which)... will affect all Western economies, not just peripheral Europe, but the UK, the US and Japan as well," Brooks said.

The dollar fell against the Swiss franc on Thursday, trading at 0.8160 francs at 2100 GMT, compared to 0.8181 a day earlier.

It weakened against the British pound, trading at $1.6142 against the pound compared to $1.6102 on Wednesday.

Copyright AFP (Agence France-Presse), 2011