Fed Kills Gold Trade, but Doesn't Bury It
NEW YORK ( TheStreet) -- The Federal Reserve Open Market Committee made it clear on Tuesday that the central bank isn't about to rush to the dollar printing press with another round of quantitative easing, but there is a difference between killing softly and burying the gold trade.
Since the central bank easy money policy was put in place in response to the financial crash, volatility has typified the gold trade. However, in giving the market no reason to believe QE3 is around the corner, the Fed didn't change course. Speculative traders keeping the gold bubble afloat simply expected too much, and too soon, in terms of Fed action.
Consider that just last week when Federal Reserve Chairman Ben Bernanke spoke at an industry conference the markets interpreted his benign words as a wink and a nod that QE3 was on the way. What a difference a week makes. When the commodities trade, specifically, is positioned on a prayer that central bank policy creates inflation that is a danger, said Jon Nadler, senior metals analyst at Kitco.
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