(Kitco News) - Federal Reserve chief nominee Janet Yellen said Thursday “nobody has a very good model” of what moves gold prices but investors want to hold the precious metal when they are worried about a collapse in financial markets and economic perils.
Janet Yellen, Federal Reserve chief nominee and vice-chair of the Board of Governors.
Yellen, nominated by President Obama last month, appeared before the Senate Banking Committee in a confirmation hearing. During a question-and-answer session, she was asked whether rises and falls in the price of gold can act as an economic indicator.
“I don’t think anybody has a very good model of what makes gold prices go up or down,” she said. “But, certainly, it is an asset that people want to hold when they are very fearful about (a) potential financial-market catastrophe or economic troubles and tail risks.
“And, when there is financial-market turbulence, often we see gold prices rise as we see people flee into it.”
After asking his question about gold, committee member Dean Heller (R-NV) said he was more satisfied with Yellen’s answer then he was with current Federal Reserve Chairman Ben Bernanke’s answer when he was asked about his opinions on gold in July.
Back in July, Bernanke told the same Senate committee that “nobody really understands gold prices and I don't pretend to understand them either."
By Allen Sykora of Kitco News email@example.com