Federal Reserve Policy Drives Precious Metals Higher
Gold drove to an all-time high on Wednesday after officials at the Federal Reserve hinted that they might start buying debt to help the recovery.
Markets reacted on Wednesday by sending gold 1.43% higher to $1,293 an oz. Silver reached a 30-year high hitting $21.06 an ounce. Copper and platinum were also up, hitting five and four-month high's respectively.
Inflation rates are low, two percent below the Federal Reserve's target rate. Low inflation is perceived as being a threat to the recovery. Falling prices and low wages leads to lower production and more price decreases, a deflationary spiral.
The Federal Open Market Committee indicated that it did not intend to raise interest rates. The Federal Reserve can fend off inflation by buying long-term treasury debt which pushes more money into the economy, a policy known as quantitative easing.