In his address to the Joint Economic Committee in Congress, Bernanke reportedly said US gross domestic product may not grow much and “could even contract slightly” over the first half of 2008.
However, he added that economic activity was expected to strengthen in the second half of the year as the result of “stimulative monetary and fiscal policies”.
Wall Street closed moderately lower on the news, with the Dow Jones Industrial Average slipping 0.36%.
Closer to home, the S&P-ASX 200 index closed the day 106 points (1.9%) higher at 5608.9, while the All Ordinaries closed 100.9 points (1.8%) higher at 5645.8.
The major miners both ended today’s session in positive territory with BHP Billiton adding $1.34 to close at $38.09, while its takeover target Rio Tinto added $4.79 to close at $130.15.
Bernanke's comments overnight have shored up support for gold, a Sydney-based trader told Dow Jones newswires.
The unnamed trader told the newswire that the short-term outlook on gold remained bullish, as Bernanke's admission of a possible recession should encourage safe-haven buying of gold, while with crude oil still above $100 a barrel, gold is also attractive as an inflation hedge.
The trader added that although Bernanke was expecting a rebound in the second half of this year, the likelihood of a recovery was hardly certain with gold to continue to benefit from this uncertainty.
Spot gold was last trading at $US902.90 an ounce, down $1.10 on New York close.
Gold plays on the Australian Securities Exchange bounced back today with Newcrest Mining closing $1.39 higher at $33.44, Lihir Gold adding 4c to close at $3.41 and Sino Gold closing 8c higher at $7.09.
On the London Metal Exchange, three-month traded copper closed 2.4% higher at $US8549 per tonne but was last trading down $30 at $8,519/t.
LME three-month nickel closed $1000 lower overnight to $28,350/t. Nickel was last bid at $28,600/t.
There is speculation that Russian billionaire Alisher Usmanov’s Gazmetall Holdings will be selling its 19.7% stake in Mount Gibson Iron by way of a bookbuild that may fetch around $A460 million, a person close to the situation told Dow Jones.
Mount Gibson Iron is in a trading halt pending the announcement of a potential transaction involving a material shareholding in the company.
The news comes after the Takeovers Panel blocked the sale of Gazmetall’s 19.7% stake in Mount Gibson to a subsidiary of Shougang Corporation.
Meantime De Grey Mining, one of the big movers on an otherwise flat day yesterday amongst the mining stocks, slumped 3.5c (26%) to close at 10c.
The iron ore hopeful doubled its share price to a high of 15c yesterday after its ballot win over seven other applicants for an iron ore tenement in the Pilbara.
In other news, Zinifex says it now holds a relevant interest in 82.42% of Allegiance Mining shares, up from 77.24%.
