Gold nudges higher as traders wait on Bernanke

Gold futures traded modestly higher in the early part of Wednesday’s Asian session as traders await congressional testimony later Wednesday from Federal Reserve Chairman Ben Bernanke.

On the Comex division of the New York Mercantile Exchange, gold futures for August delivery rose 0.17% to USD1,292.55 per troy ounce in Asian trading Wednesday after settling up 0.48% at USD1289.65 a troy ounce during Tuesday’s U.S. session.

Gold futures were likely to find support at USD1,237.05 a troy ounce, the low from July 8 and near-term resistance at USD1,301.75, the high from June 21.

Gold got a lift thanks to a pair of U.S. data points. In U.S. economic news out Tuesday, the National Association of Home Builders/Wells Fargo housing-market index rose to 57 in July from 51 in June. The July reading is the highest since January 2006.

The Labor Department said U.S. consumer price inflation rose 0.5% in June following a 0.1% rise in May. Economists expected a 0.3% June increase. Core CPI increased at annualized rate of 1.6% last month, in line with forecasts and slowing from 1.7% in May.

Core prices are viewed by the Federal Reserve as a better gauge of longer-term inflationary pressure because they exclude the volatile food and energy categories. The Fed is aiming to keep inflation around 2% or less. Industrial production rose 0.3% in June, the biggest increase in four months.

Traders will now turn their attention to Wednesday’s testimony from Bernanke after the Fed chief ignited a rally in gold last week when he said tapering of the central bank’s USD85 billion a month quantitative easing program is not as imminent as some investors previously expected.
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