Gold Bugs Hope to Dodge Benanke's Flyswatter

June 19, 2012 7:59 AM EDT
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SPDR Gold Trust (NYSE: GLD) is expected to open higher on Tuesday, as spot gold prices rally. The move higher isn't expected to have much more traction short-term, as gold traders await the FOMC rate decision on Wednesday. While rates are not expected to change, comments from the Fed are expected to indicate further quantitative easing, and this has gold bulls sharpening their horns. Easy monetary policy supports gold prices because it adds liquidity and helps stoke inflation. Gold bulls also hope an easy-money policy will undermine the bullish trend in the U.S. dollar. However, if Fed officials fail to deliver on QE in terms of size and scope, it could send gold-bugs scrambling, and gold would likely head back below $1600/oz.

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