|Bernanke Puzzled by Gold Rally
The Wall Street Journal | June 9, 2010
Federal Reserve Chairman Ben Bernanke says he’s a bit puzzled by surging
gold prices. The 30% rally from a year ago, on top of gains in previous
years, might be interpreted as a loud signal from markets that big inflation
pressures are building in the U.S. Gold is seen by many investors as a
hedge against inflation risk.
“I don’t fully understand movements in the gold price,” Mr. Bernanke admitted. But he suggested it might be another example of investors fleeing risky assets and flocking to assets that are perceived as less risky, not only Treasury bonds, but also ones like gold.
Bernanke also defended the stimulus in his cautious testimony as a temporary measure to boost the economy, but warned of continuing deficits.