Mixed Central Bank Policies Complicate Gold's Repsonse to QE

Gold changes little in European session. Price action in late-2008 to 1Q09 suggested QE is positive for the yellow metal. During the period, gold price rallied and approached 1000 in February 2009 after tumbling to 710 in November 2008 as the Fed announced QE measures. While, in theory, gold should rally again as Fed’s reinvestment plan indicates the resumption of QE, the situation this time may be more complicated. In late-2008 to 2009, global central bankers concurrently adopted easing policies to combat the worst recession and major central banks aggressively took interest rates to unprecedentedly low levels. As world economy began recovery later in 2009, monetary policies diverged.

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Mixed Central Bank Policies Complicate Gold's Repsonse to QE