During this period, gold went up from an average of $841.75 to its all time high of $1917.90 on August 2011, which is an increase of 227% over a 3 year period. This shows an explicit relationship between QE announcements and gold. The key question remains: will there be an announcement of QE3 on Friday? Recent increases in commodity prices of gold, silver, and platinum suggest there is something on its way. In my opinion, no actual implementation of a QE3 will take place, but there might be an extensive discussion of the possible actions that are available to the FED. If you take a closer look at the market you can see that consumer confidence is stable, the market is testing its 2012 highs, housing is improving and inflation is right around 2%. Why intervene? Will an announcement of inaction affect the gold market?
It is likely in the short-term, but in the long-term definitely not. The recent bull run in gold and the way it is consolidating right now, suggests there is more room for the upside. Also, current gold accumulation by Central Banks shows a growing interest in the metal over 2012, as the graphs below will show. The Central Bank appetite for gold hit a record in Q2 2012. Gold buying in Q2 2012 rose to 157.5 tons. On an annualized basis this means an astonishing 628 tons. There appears to be a solid floor under the gold price.
