Morgan Stanley: QE3 even more bullish for gold

Morgan Stanley was already bullish on gold for the remaining portion of 2012, but the advent of QE3 by the Federal Reserve pushed the firm even more fully into the bullish camp on gold.

“The size and strength of the recent upside move in gold is reflective of decisively changed perceptions of Fed policy going forward, in our view,” Morgan Stanley says. “Effectively, QE3 for as long as it takes and close to zero interest rates for another three years is, we contend, markedly different from Operation Twist and only two more years of ultra low rates. The Fed also made it clear that it would pursue easy monetary policy ‘for a considerable time’ even after the economy strengthened.” The news should mean a weaker U.S. dollar. Still other factors that are supportive for gold include the European Central Bank’s bond-buying program and limited gold sales by European central banks, Morgan Stanley adds.

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