Fed Minutes Hint at QE3 Expansion, Precious Metals Hold Firm

The latest Federal Reserve minutes, a recap of last month’s Federal Open Market Committee (FOMC) meeting, noted that many central bankers are in favor of expanding the Fed’s third-round of quantitative easing (QE3).

“Looking ahead, a number of participants indicated that additional asset purchases would likely be appropriate next year after the conclusion of the maturity extension program in order to achieve a substantial improvement in the labor market,” the minutes stated.

The maturity extension program refers to Operation Twist, which is scheduled to end on December 31st, and consists of $45 billion in purchase of longer-term U.S. Treasuries and $45 billion in sales of short-term U.S. Treasuries per month.  QE3, meanwhile, is currently comprised of $40 billion in purchases of mortgage-backed securities per month.

The Ben Bernanke-led central bank did not mention the size of any potential QE3 expansion under consideration, however.

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Following the release of the Fed minutes, gold futures initially climbed to $1,734.10 per ounce but soon after pared their gains on the way back toward $1,730.  Silver futures extended their gains as well, to as high as $32.93, but later retreated toward $32.70 per ounce.

The full version of the minutes is available at the Federal Reserve’s website.