Jackson Hole

Jackson Hole: LONDON, - Gold prices arrested this week's slide on Friday to rise nearly 1 percent ahead of a speech from Federal Reserve chairman Ben Bernanke in Jackson Hole, Wyoming, later, which will be closely watched for hints on the outlook for Fed monetary policy.
The metal is still set for its first weekly loss in eight, however, as investors took profits after its surge to record highs at $1,911.46 on Tuesday. Volatility spiked, with prices sliding more than $200 from that level by Thursday.
They have since recovered, with spot gold up 1 percent at $ 1,786.86 an ounce at 0921 GMT.

"Volatility is ... about 65 percent higher than in 2010, the average," said Ole Hansen, a senior manager at Saxo Bank. "This tells us that, despite the upward trend is firmly intact, we should expect violent adjustments as we go forward."

"Weak speculative longs are now blurred, and the market settles down on Bernanke. QE3 or not QE3, it does not change soon heavyweight prospects for economic activity and concerns about the health of the banking sector and the public debt."

It will be widely watched Bernanke on the financial markets, hoping for some indication of the U.S. central bank ready to intervene to support the economic recovery.

It is seen as unlikely to announce a third round of the Fed buying bonds, or quantitative easing. The Fed has bought $ 2.3 trillion in long-term securities.

Hansen, Saxo Bank said while the market could correct further, if not more, quantitative easing will be announced that he did not expect that gold will drop below $ 1,700 an ounce.

"This sale reflects the past, some scaling down of expectations QE3 suggests that the reaction of gold potential for disappointment today may be less severe," said UBS in a note.

"Although we believe that the bulk of sales will be made, the fragility of investor sentiment for gold at the moment and a rebound in the last 12 hours could mean that gold will suffer further losses, though smaller than in recent days."

U.S. gold futures GCv1 for August delivery rose $ 26.40 an ounce to $ 1,789.60.

MARKET SHARES RETREAT

On the wider markets, European shares slipped on Friday, while the euro firmed a touch versus the dollar and industrial commodities like oil and copper eased. German government bonds held steady ahead of Bernanke's speech.
Outflows from the world's largest gold-backed exchange-traded funds also dried up on Thursday, with its holdings remaining at 1,232.3 tonnes. It is still on track to post an outflow of nearly 60 tonnes this week, however.

"Now that the short-term traders (a) booked profits in gold futures and ETFs, there are also individuals buyers, who moved to the last meeting, and who will choose to keep their desires," said VTB Capital in a note.

Among other precious metals, silver prices retreated 0.5 percent to $ 40.80 an ounce.

Metal could not send its usual stellar earnings on the back of the last rally of gold, as investors burned him a sharp correction in prices earlier this year - when he fell more than 30 percent in less than a week - remain cautious.

The gold: silver ratio, representing the number of silver ounces needed to buy an ounce of gold, stood at around 43 on Friday, well above the level around 30 it traded near in April when both metals hit record highs.