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Will the Fed use a second round of quantitative easing to inflate the economy?

*Reuters, by Jan Harvey, October 26, 2010

‘Gold eased in Europe on Tuesday as the dollar index rose, but its range was limited as investors awaited clues from U.S. data due this week on the prospect of further monetary easing in the United States.

The Federal Reserve will discuss at a meeting in Washington next week whether to extend its quantitative easing policy to accelerate growth.  This could have significant implications for the dollar and inflation, and consequently gold.

Spot gold was bid at $1,333.66 an ounce at 1257 GMT, against $1,338.00 late in New York on Monday.  U.S. gold futures for December delivery eased $4.50 an ounce to $1,334.40.

Prices hit a record $1,387.10 an ounce earlier this month as the dollar slid amid expectations the Fed would vote in favor of QE at its upcoming policy meeting, but retreated as investors worried the prospect had become too heavily priced in. ‘We think (gold) will head higher, but clearly there will be corrections along the way,’ said David Wilson, an analyst at Societe Generale. ‘I expect after Nov 2-3, when we get more clarity over QE2, we should see more positive momentum.’ ”

*This information is solely a highlight of the opinion of a third-party publication and is incomplete.  Please subscribe to this publication for the full and timely opinion of the author and call a Monex Account Representative for any additional up-to-date information. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.