The wait for goldbugs is finally over. The US Federal Reserve officially launched its third round of quantitative easing earlier this month - nicknamed QE3 - comprising an open-ended money-printing program designed to kick-start the US economy. It will now make monthly $40bn (£25bn) purchases of mortgage-backed securities - in addition to the $45bn of asset purchases each month under the ongoing Operation Twist - and will not stop doing so until the central bank sees "sustained improvement in the labour market", thus giving hope to gold investors that the recent market appreciation in the value of their asset of choice will be sustained.
Gold, widely seen as a traditional safe haven against inflation, has wasted no time in taking the cue. The yellow metal is up to around $1,775 (£1,123) an ounce in New York, a six-month high.
But with the past two rounds of global money printing having helped push gold from around $750 an ounce in late 2008 to a peak of just over $1,900 an ounce last September, traders are eyeing this as a longer-term catalyst for the metal's next big jump upward - with $2,000 an ounce seen as a definite possibility this time around.
Commenting on the Fed's announcement, Mikayel Verdyan, analyst at Forex Club, said: "We expect investment demand to grow as investors look to buy precious metals as an inflation-hedging asset - as such policy is likely to strengthen inflation figures."
