Market Reacts to QE3, Gold Buying Up

Ever since Ben Bernanke announced a fresh wave of quantitative easing, the market has been doubtful about the dollar’s ability to hold its own. Investors and market analysts alike are of the opinion that the dollar will weaken considerably in the coming weeks as well. As a result, keen interest is being evinced by investors to buy gold, the ever popular safe haven asset. 

Dollar Depreciates Against Euro

What is surprising and perhaps alarming is that the green back has also fared badly when compared with the Euro. Considering that the Euro continues to be under immense thanks to the continuing economic issues in the Eurozone countries, this is a bad sign indeed. Not very long ago the dollar was clearly moving up while the Euro stagnated amidstGreece’s financial woes.

The dollar dip against the Euro was very evident post the official announcement of mortgage bond purchase to the tune of $40 million. This was part of the Fed’s QE moves that were made public in July.

Gold Fares Better than Crude Oil

The yellow metal is definitely in a strong position and this is clear by the marked difference between gold price increase and that of crude oil. In spite of tensions in oil rich nations which traditionally keeps oil prices sky high, crude oil has not seen as much price growth in recent times as gold. Investors should not allow the price rise with the yellow metal to dissuade them from going on a gold buying spree, though. The QE3 measures have set the stage for a consistent rise in prices which means that buying gold coins or adding gold in IRA continues to be a smart investment decision.

Gold Bullion as a Hedge

Investor interest in gold bullion can be attributed to its status as the perfect hedge against central bank fiscal policy, say analysts. The market is reacting to the government’s intervention with the economic slowdown, i.e.: the quantitative easing. As fears about the stability of the dollar rise, it is inevitable that more investors seek to move into hedge assets like gold bullion.  Older investors who are nearing retirement are especially likely to buy into gold coins or add gold to IRA now. The yellow metal will protect their portfolio’s net value in the event that inflation erodes other cash based assets drastically.