SINGAPORE: Gold jumped to its highest level in more than two weeks on Thursday after Federal Reserve Chairman Ben Bernanke said the US central bank will continue to pursue an accommodative monetary policy for now to support the US economy.
Bullion, which is down about 25 percent this year, has taken a hit after Bernanke said in May and June that the Fed could begin tapering the bond purchases later this year.
Wednesday's comments suggest that the bond purchases could last longer, supporting prices of gold that is typically seen as a hedge against inflation.
"Bernanke was quite dovish in his comments. Maybe we won't see a pullback in quantitative easing as quickly as we anticipated," said Amber MacKinnon, an analyst at Nomura Securities in Sydney, referring to the Fed's stimulus measures.
"We are likely to see a short-term rally in gold up to around $1,400 and then a fall back to current levels."
Spot gold was up 1.5 percent to $1,283.11 an ounce by 0211 GMT, extending gains into a fourth day. It earlier climbed to $1,289.35 - its highest since June 24.
US gold jumped as much as 3.3 percent to a two- and-a-half week high of $1,288.3. Spot silver also rose 3 percent to $19.93 - its highest in one and a half weeks.
Spot gold may break a resistance zone of $1,294-$1,302 per ounce and rise more to $1,331, Reuters technical analyst Wang Tao said.
Bernanke on Wednesday said a highly accommodative policy was needed for the foreseeable future as inflation remains low and the employment rate may be overstating the health of the labour market.
Minutes from the Fed policy meeting in June showed that about half of the bank's policymakers felt the stimulus programme should be brought to a halt by year end, but many wanted reassurance the US jobs recovery was on solid ground before any policy retreat.
The Fed has been buying $85 billion a month in US government and mortgage-related debt, in a move seen as stoking inflation and supporting gold's appeal.
Physical demand in key markets India and China is subdued, and not similar to the rush seen in April. A near-term rally in spot prices could further hit demand.
India's jewellers could continue a voluntary ban on sales of gold coins and bars for six months, in support of the government's efforts to curb imports, a trade body said in a statement on Wednesday.
SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.07 percent to 939.08 tonnes on Wednesday.
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