Fed QE uncertainty leads to gold value variations

Changeable investor predictions on whether the Federal Reserve (Fed) will end or slow down its quantitative easing (QE) programme this year have caused the value of gold to yo-yo.

In commodities trading today (January 7th), the price of the precious metal was up and down as traders consider what the central bank will do next, after it published its minutes on Friday which revealed several members of its policy committee thought the institution will be able to slow or cease bond-buying before 2014.

QE is a key source of liquidity for the world's largest economy, but it weakens the dollar and therefore historically drives up the value of assets that are dollar-denominated, such as gold.

However, the Fed's decision and its outcomes remain uncertain and many investors are looking for further signs of the central bank's intentions.

At 16:31 GMT, Forex Gold depreciated by 0.2 per cent to $1645.25 per ounce.

Gold rallied by 8.8 per cent in 2012, Bloomberg reported last month – achieving its 12th annual gain.

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