Gold price gains 1% following rise in Middle East tensions
Spot gold was 0.9% higher at $2,405 per ounce by 2:30 p.m. ET, its biggest intraday gain since July 16.
If the US Federal Reserve continues to print money at the current rate of $85 billion a month and do not announce any cutbacks to its quantitative easing program today, the US central bank’s balance sheet would top the $4 trillion mark by the end of the year.
Expectations vary widely on when the Fed will throttle its asset buying program, but few expect it to be this year and some economists only see cutbacks in Spring of next year.
The US has not been alone in printing money and together with the Bank of Japan, the European Central Bank and the Bank of England, more than $9 trillion of easy money is now sloshing around in the system.
Gold’s status as a hedge against inflation and a storer of wealth has taken something of a knock this year with inflation staying low in developed markets despite the constant money printing.
Nevertheless, monetary expansion, particularly since the financial crisis, has been a massive boon for the gold price.
Gold was trading around $830 an ounce before Chairman Ben Bernanke announced Q1 in November 2008 and this new infographic from the World Gold Council shows how the yellow metal helps to maintain the purchasing power of any portfolio:
Click here for full size graphic
