GOLD extended its record highs today as comments from Federal Reserve chairman Ben Bernanke reinforced the notion that the central bank is in no hurry to raise interest rates even after it telegraphed the end of its bond-buying program.
The most-actively traded gold contract, for June delivery, reached an intraday record $US1527.70 in electronic trading during the Fed chairman's first ever post-meeting media conference.
In his remarks, Mr Bernanke said Fed officials don't have a specific timeframe for beginning to tighten US monetary policy.
The central bank signalled the end of its controversial $US600 billion ($552bn) bond-buying program as planned, but it held the line on interest rates.
Fed officials reiterated that they expect short-term rates to stay at a record low for an "extended period" and said they plan to keep the size of the Fed's more than $US2 trillion balance sheet steady by reinvesting the proceeds when bonds in its large portfolio mature.
Market participants were interpreting any signs of accommodative language as the central bank being willing to accept higher inflation, which is a positive for gold and silver as inflation hedges.
Easy monetary policy has also helped to spur gold and silver to recent record highs by encouraging speculators to pile into the precious metals.
The June gold contract rose $US13.60, or 0.9 per cent, to settle at a record $US1517.10 a troy ounce. The nearby contract for April delivery settled at a record $US1516.70, up $US13.70, or 0.9 per cent.
The most-actively traded silver contract, for May delivery, gained US90.8 cents, or 2 per cent, to settle at $US45.958 a troy ounce. Front-month April silver advanced US90.6c, or 2 per cent, to end at $US45.964.
Silver futures have been especially volatile in recent days as investors have piled into the relatively small market for the metal, which is seen as a cheaper alternative to gold.
The combination of ultra-low interest rates -- which also boost the allure of noninterest-bearing gold and silver -- and Fed purchases of Treasuries to stimulate the US economy has caused some to believe the central bank won't be able to sop up extra liquidity in time to avoid problematic consumer- and producer-price increases over the longer term.
The precious metals have been on a choppy ride this week -- with silver hitting a record intraday peak of $US49.820 on Monday before pulling back -- as participants had been uncertain of how the Fed might react in light of recent signs of higher food and energy prices, even though core inflation, which strips out those prices, has been subdued.
"They've said that there's no imminent reason to change policy," said Jim Steel, senior vice-president and metals analyst with HSBC Holding in New York. "That implies that monetary policy will be accommodative perhaps longer than expected."
The Fed's statement also pressured the US dollar, further boosting the metals. US dollar-denominated gold and silver tend to rise when the US dollar falls because that makes them less expensive for buyers using other currencies, helping demand.
Other precious metals also gained today. Nymex July platinum rose 0.8 per cent while June palladium gained 0.3 per cent.
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