Gold and other markets rallied on Monday following Federal Reserve Chairman Ben Bernanke’s comments regarding the U.S. labor market. The length and strength of the gold rally could be subject to investor’s view of monetary policy, said HSBC in a research note.
While Bernanke gave no indication of further monetary easing or another round of quantitative easing, monetary stimulus would continue, but not necessarily enhanced, HSBC added.
“This distinction could help define gold’s upside potential. We believe that the gold rally can continue, as monetary policy already is very accommodative. As long as the Fed maintains its dovish stance, gold is likely to be well-supported, and a third round of QE is not required for further gains. If sentiment were to shift toward expectations of QE3, the gold rally could accelerate,” HSBC concluded.
Source: Commodity Online