Gold market pricing higher probability of QE3

Friday’s disappointing employment situation report marked a shift in expectations for further quantitative easing as gold traders pushed Europe to the side to focus on a response from the Fed that was previously unexpected. Before the number the market had translated Fed rhetoric as QE3 was possible but likely unnecessary given a slow but steady recovery in the US and turned their focus to the deteriorating situation in Europe and the US Dollar strength that accompanied it. The weak NFP and uptick in the unemployment rate to 8.2% in May were bad enough to possibly compel the Fed to step in. Gold traders will be monitoring any statements that come out of the Fed for further indication that QE3 is imminent in anticipation of the next FOMC meeting June 19^th-20^th.