BMO: U.S. Debt-Ceiling Debate, Continued QE To Boost Gold

Wednesday September 18, 2013 3:06 PM

The combination of the Federal Open Market Committee’s continued bond-buying program and upcoming U.S. debt-ceiling debate should further support gold, says BMO Capital Markets. The FOMC announced Wednesday it will not start tapering quantitative easing. “The extent of gold’s rise, of course, depends on perceived risks to the U.S.’s credit rating, which depends on how protracted the debt-ceiling debate is,” BMO says. “BMO Research analysis suggests that gold prices could be boosted by up to 15% and, over the longer term, continue to rise in tandem with U.S. indebtedness.” However, BMO says, at some point investors will again consider when the Fed might taper, which would revive expectations of rising real Treasury rates. “If history is any indicator, the near-term impact of real rates on gold prices is greatest during periods in and out of negative territory; the current situation has the potential for significant volatility to year-end.”

By Allen Sykora of Kitco News; asykora@kitco.com

It keeps getting better ..!!