HardAssetsInvestor

Written by Sumit Roy  |

December 11, 2012

Gold To Rally Back Toward $1800 As Fed Unveils QE4, $1 Trillion Per Year Of Bond Buying

Details

We offer our latest analysis on the precious metals market.

Gold rebounded last week after prices successfully tested levels near November's $1675 low, which is now an important technical support.

GOLD

SILVER

In our view, prices are now ready to rally back toward this year's high near $1800 after the Federal Reserve announced a fourth round of quantitative easing (QE4) to replace the expiring asset swap program, Operation Twist.

In Operation Twist, the Fed sold its short-term Treasurys and replaced them with longer-term bonds. The program was designed to stimulate the economy by bringing down long-term rates, in much the same way as the Fed's various quantitative easing programs.

However, this month the Fed will run out of short-term Treasury holdings to sell. Thus, the central bank has opted to initiate a new program to replace "Twist."