GOLD consolidated near its recent highs after the QE3 announcement from the Federal Reserve even as other asset classes experienced broad weakness. Gold traded a $1,754 to $1,773 range. There are increasingly bullish signs that gold may trade higher as inflation becomes a concern in the wake of QE3. We have always maintained a bullish long term view on gold. Our recent bearish view on gold was supported only by our belief that another round of quantitative easing from the Federal Reserve would not eventuate this year. The only obstacle to higher gold prices, a Fed reluctant to enact another round of stimulus, is now gone. We now revise our outlook on gold to bullish in the medium term. New record highs this calendar year are increasingly likely. In the short term there is still scope for some falls after the recent price surge. However, any falls will be short lived. Despite still weak fundamental demand from key markets like India, gold has never really been driven by demand.
Look for a $1,768 to $1,785 range today.