Will the Fed put a finger in the proverbial inflationary dike?
*The Wall Street Journal, by Matt Day, May 21, 2013
”Mr. Bernanke is expected to testify before Congress on Wednesday ahead of the release of minutes from the Fed’s most recent policy meeting. Gold traders have spent much of the last few years watching for shifts in Federal Reserve policy. Easy-money policies like the Fed’s current bond-buying program tend to draw investors to gold as a hedge against the inflation that can follow a cash-flush financial system.
Traders say the Fed’s bond-buying programs have been a key support for gold prices. Worries that an improving U.S. economy will spur the bank to roll back its stimulus have limited investor demand for gold this year.
‘There are a lot of people still thinking that [the Fed] will start to tap on the breaks,’ said Stephen Platt, a market strategist with Archer Financial Services. ‘That gives them a little bit negative attitude toward precious metals.’
Gold cut its earlier losses near midday Tuesday, briefly pushing toward unchanged after James Bullard, president of the Federal Reserve Bank of St. Louis, said in a speech that the central bank should press forward with its bond-buying program, but be willing to change its size depending on economic events.”
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