Fed Chair nominee Janet Yellen spoke briefly about gold prices today during the Q&A session with the Senate at her confirmation hearing.
After the opening statements and answering questions regarding employment, quantitative easing and the monetary policy, Senator Dean Heller of Nevada asked Yellen if she knows why gold prices fluctuate and if the economy is an indicator of those prices.
“I haven’t seen a lot of models that have been successful in predicting them,” said Yellen. “I don’t think anybody has a very good model of what makes gold prices go up and down.”
She also mentioned that gold is an asset people turn to during economic turbulence and is often used as a safe-haven against financial-market risk.
Her brief response was much more in-depth than Bernanke’s answer to the question in July, when he responded with, “Nobody really understands gold prices and I don’t pretend to understand them either,” according to Heller.
Precious metals prices jumped during Yellen’s hearing, with gold rising more than 1.4 percent to $1,287 as of this writing. Silver, platinum and palladium were all seeing green arrows as they surged upward as well.
The hearing lasted more than two hours with Yellen signaling that big changes wouldn’t be made to central banks and tapering would be discussed at the upcoming Fed meetings. She hopes to see more improvement in the labor market and economy before easing bond purchases.
If she is confirmed, Yellen will replace current chairman Ben Bernanke and become the first woman to lead the organization in its 100-year history.
What are your thoughts?
Are gold prices an indicator of the economy?
Are you more comfortable with Yellen as Fed Chair than Bernanke?