MCX Gold Skyrockets As QE Comes True

Gold futures skyrocketed enjoying the rally along with other assets as markets take pleasure of the extraordinary and bountiful step taken by the Federal Reserve yesterday.

The metal sparkled following the QE announcement by Fed. Gold for December delivery ended higher by $38.4 or 2.2%, to end at $1,772.1 an ounce on the Comex division of the New York Mercantile Exchange on Thursday.

Prices were hovering around $1,728 before the Fed announcement. Thursdays settlement was golds highest since late February and the largest one-day percentage increase since late June.

The Federal Open Market Committee, which ended a two-day meeting on Thursday, said it was concerned that, without the action, economic growth might not be strong enough to generate sustained improvement in labor-market conditions.

A key element of the Feds statement was that the central bank will keep buying until more jobs are created, possibly at a faster rate. The Fed said it would buy mortgage-backed securities at a pace of $40 billion per month.

In addition to bond purchases, the Fed said it intends to keep the benchmark short-term interest rate, known as the federal funds rate, at nearly zero until mid-2015. The prior guidance on the first rate increase had been late 2014.

The guidance now extends well beyond end of Bernankes term in early 2014, although he could be appointed to another term by whoever is president. The central bank has kept the federal funds rate at nearly zero since December 2008. Via

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