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Tuesday, September 25th, 2018 - Buy Gold - Bringing you trusted gold news and gold investing information since 2006

US Federal Reserve Policy Favors Gold Price Explosion


The price of gold per ounce over the past year has advanced greatly as the Federal Reserve of the United States has been engaging in quantitative easing and monetary policies that are very loose. If you do a simple math about the price trend of gold, you will see that gold has gained $198 per ounce over the past 30 days and a whopping $548. 70 price gain per ounce over the past one year.

Just last Tuesday, at the conclusion of the Federal Open Market Committee (FOMC) meeting, the Federal Reserve announced the continuation of its zero interest rate policy through the middle of 2013. That step contradicts Fed’s own policy of not making commitments that limit future monetary policy flexibility but majority of the committee members voted in support of zero interest rate policy for the future though three of its seven members voted against the zero interest rate policy elongation.

The Federal Reserve has maintained interest rate for 32 months now with little or no improvement in the economy to justify the effectiveness of the monetary policy. Many consumers are still being burdened with heavy debt as they are fast reducing their spending and the economy is dwindling with every passing day. Real estate rates are running in the negative, inflation is hovering between 5 and 10 per cents. Besides, the purchasing power of the majority is gradually being eroded by the monetary policies of the Federal Reserve and hope of economic recovery seems nowhere near in the horizon.

These are truly the signs for the possible explosion in the price of gold as the Fed committee also said that they do not expect quick recovery but a slower pace of economic recovery. The primary factor for the continual increase in the price of gold has been the Fed economic policies and further inevitable future policies aimed at quantitative easing will climax the explosion in the price of this precious metal which many people and even central banks of many nations have taken to be the hedge they need to protect their assets and achieve gain in capital appreciation.

 


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