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18 May 2012

Gold Targets $1,600 on QE3 Expectations

Physical retail Gold and Silver buying activity has returned this week as Gold and Silver provided a welcome opportunity for physical Bullion coin and bar investors to get back into the market.

Golds strong bounce on Thursday was bolstered by further strong trading in London on Friday morning added to the strong gains made on Thursday. The lacklustre physical buying reported by at the start of the month has given way to a clamor by buyers to further increase their positions in the face of rising prices.

With precious metals were already firmly in oversold territory at the start of the week. Indications by the Federal Reserve that it was ready to implement a further round of quantitative easing, which had previously been regarded as remote, served to act as the impetus for the stronger than expected turnaround in the market. While we had predicted the re emergence of QE III would be a trigger for a turn in the Gold and Silver price in our last commentary, the timing of this had taken us by surprise.

Further positive price pressures might be added to by further woes in Europe, with Greece having its credit rating cut again and Spanish banks also suffering a further rate cut. The feeling that the European crisis could be running away from the grasp of policy makers to some kind of a disastrous conclusion, may becoming harder to shake for some observers.

But with currency and stock markets experiencing convulsions once again, it seems likely that this volatility may spill into the precious metals markets, as we have seen many times before, to test the faith of Gold and Silver holders. It is all too easy for Gold and Silvers rise to be interupted by a "dash for cash" by investors or a flight to the percieved safety of the dollar.

At most types of available Gold Bullion have risen into the weekend to meet retail demand.

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