Gold News & Info

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold gained 0.5% after the FMOC agreed to expand its program of quantitative easing. In a program widely called QE4, the Fed will purchase of $45 billion in long-term Treasuries each month, in addition to the $40 billion in mortgage-backed securities already being bought under QE3. Tantamount to printing money, the expanded easing program is expected to weaken the dollar and boost demand for gold as inflation hedge and alternative store of value. The dollar fell for the third straight session, boosting the appeal of precious metals. Silver jumped 2.3% while sister metals platinum and palladium added 0.4% and 0.6%, respectively.

At the Comex close: February gold gained $8.30 to $1,717.90; March silver jumped 77 cents to $33.78; January platinum added $6.40, to $1,646.40; and March palladium picked up $4.35 to $701.15 an ounce.

In a surprise move, the Fed also announced an unprecedented change in interest rate policy. Rather than maintaining near-zero rates until 2015, as it previously pledged, the Fed will now maintain them until unemployment drops to 6.5%, provided inflation remains below 2.5%, no matter how long it tales. For the first time, the central bank is linking its policy changes to hard economic thresholds for inflation and unemployment, rather than to arbitrary time-frames. The combination of QE4 and the new rate-pledge should drive gold above its all-time high of $1,923 sometime next year, says Edel Tully, global precious metals strategist for USB in London.