* Fed ready to take further action if necessary
* U.S. growth slows more sharply than first thought
(Recasts, adds comment after Bernanke)
By Jan Harvey
LONDON, Aug 27 (Reuters) - Gold prices rose on Friday after
comments from U.S. Federal Reserve Chairman Ben Bernanke raised
the prospect of further quantitative easing and the possibility
of inflationary pressures.
Spot gold <XAU=> was last bid at $1,240.30 a troy at 1500
GMT from $1,234.94 late in New York on Thursday. U.S. gold
futures for December delivery <GCZ0> rose $5.9 to $1,243.6.
Bernanke said the U.S. recovery has softened more than
expected and that the U.S. central bank is ready to take further
steps if needed to spur the stumbling economy. []
The initial reaction was a stronger dollar against the euro,
which makes gold more expensive for European investors. That
pushed gold down to $1,231.75 an ounce. []
"That was the knee-jerk reaction," said Eugen Weinberg,
commodities analyst at Commerzbank. "Then the focus shifted to
Bernanke saying they are ready to do more quantitative easing,
ready to buy more bonds. That means more liquidity, the
possibility of inflation, good news for gold."
Analysts say further quantitative easing could potentially
see gold heading back towards its record high at $1,264.90 an
ounce seen on June 21. []
Gold <XAU=> hit a session high of $1,242.25 a troy ounce
after data showed U.S. growth slowed more sharply than initially
thought in the second quarter. []
Gold broke out of the relatively narrow range it had kept to
for much of the summer to hit a two-month high of $1,244 an
ounce on Thursday as investors fretted about the U.S. economy.
STIMULUS MEASURES
ANZ analyst Peter Hillyard said investors remained confident
in the precious metal's bull run. "The market is ebbing and
flowing in an upward move," he said.
"Between here and $1,255/56, it is going to have to do some
work. Once we get above $1,256, I don't think anything is going
to stop it until it gets to $1,300."
Analysts were optimistic in a recovery in physical demand
from major consumers such as India. A Reuters poll showed that
India's gold imports could rise to 504.5 tonnes this year.
[]
In supply news, South Africa's largest union on Friday
threatened to bring mining and other industries to a halt next
week in a strike to support labour action by 1.3 million state
workers. []
South Africa is one of the world's largest gold miners and
the biggest platinum producer by far.
Silver <XAG=> was at $19.22 an ounce versus $18.90. The
metal has retreated from the two-month highs it hit on Thursday
at $19.15 an ounce, but is still on track to rise more than 5
percent this week, its biggest one-week climb since early April.
Analysts report good fund buying of silver. Interest in
silver-backed exchange-traded funds increased, with holdings of
the largest, New York's iShares Silver Trust <SLV>, up nearly 46
tonnes so far this week. []
The ratio of gold to silver -- how many ounces of silver are
needed to buy an ounce of gold -- slipped to its lowest since
early August on Friday at 65.21 as the white metal became
increasingly expensive compared to gold.
Platinum <XPT=> was at $1,530.00 an ounce against $1,525,
while palladium <XPD=> was at $501 against $497.63.
(Additional reporting by Pratima Desai; Editing by Sue Thomas)
