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Analysts: Fed QE3 Hints May Push Gold Higher

Release Date: 
Wednesday, April 25, 2012

The price of gold was higher today ahead of the Federal Reserve’s meeting today. Gold traded at $1645.20 per ounce at 7:23 AM Pacific Time on the New York Spot Market with silver at $31.08 per ounce.

"They [the FOMC] will discuss the prolonged weakness in the economy, leaving the door open to further easing, yet [they will] make no firm commitment to do so," Jeffrey Sica, president and chief investment officer of SICA Wealth Management said.

"The Federal Open Market Committee is expected to keep its interest rate on hold, but its accompanying statement will be watched for hints of fresh quantitative easing," bullion refiner MKS said in a report. "I don't think they will announce the QE3, but Bernanke's speech may offer some hints. We don't know, but we can see that other nations have already cut interest rates," said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong. "As long as interest rates are low it's good for commodities, but it seems the euro zone is suffering."

"The precious metals complex as a whole could see a rather decent move higher if the upcoming Federal Reserve policy statement contains enough hints of a possible ease that, in turn, will enable fund money to flow back into the complex," INTL FCStone said in a research note.

"The Federal Open Market Committee announcement could be the trigger that takes gold away from its trading range," according to BNP Paribas analyst Anne-Laure Tremblay. "Any mention of the need for further monetary accommodation would of course be positive for the precious metal." Bob Haberkorn, senior commodities broker with RJO Futures, said "if they give any hints or indication that they might do something, I think you'll see gold and silver continue on an upward path." 

(Source: "PRECIOUS-Gold holds above $1,640/oz ahead of Fed," Reuters, April 25, 2012; "PRECIOUS-Gold perched at $1,641 on equities, all eyes on Fed," Reuters, April 25, 2012; "PRECIOUS METALS: Gold In Tight Range In Asia; Fed In Focus," Dow Jones, April 25, 2012; "Gold Rises 0.7% on EU Calm," Wall Street Journal, April 24, 2012)

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†This material has been prepared for private use. Although the information in this commentary has been obtained from sources believed to be reliable, Goldline does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice.

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