Gold inched up on Wednesday as the dollar fell and after Federal Reserve Chairman Ben Bernanke said he has no plans to scrap a massive bond-buying program, suggesting interest rate will not rise anytime soon. Bernanke told Congress that US unemployment is too high despite an improving economy, and he also warned about the dangers of unsustainable budget deficits.
"I saw the positives to gold in Bernanke's comments. It seems that he's going to maintain the QE2 policy in place, and that's a bullish argument for commodities," said Tom Pawlicki, precious metals and energy analyst of MF Global. In November, the Fed launched a plan to buy $600 billion in government debt to keep borrowing costs low to stimulate the economy, a process known as quantitative easing. Spot gold rose 0.1 percent to $1,364.24 an ounce by 1:40 pm EST (1840 GMT). US gold futures for April delivery gained $1.1 to $1,365.20.
Holdings of the world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, dipped to 1,228.56 tonnes on Tuesday from 1,228.864 tonnes the previous day, although the hefty outflows seen in January have apparently been staunched. Silver eased a penny to $30.30 an ounce, after reaching its highest price since January 4 on Tuesday at $30.84 an ounce.
The gold-silver ratio - the number of silver ounces needed to buy an ounce of gold - recovered from the near five-year low below 45 it reached on Tuesday to just above that level. Platinum and palladium rose back to multi-year highs on Wednesday at $1,865 and $836.75 an ounce respectively, boosted by firmer gold prices, a softer dollar, and expectations that demand from carmakers for the autocatalyst metals will improve. Platinum slipped 0.1 percent to $1,853.24 an ounce, while palladium dropped 1 percent to $827.50.