NEW YORK (Reuters) - The U.S. Federal Reserve announced a controversial policy on Wednesday to buy a further $600 billion of government bonds by the end of the second quarter 2011 in an attempt to breathe new life into the struggling U.S. economy.
RICHARD ILCZYSZYN, SENIOR MARKET STRATEGIST, LIND-WALDOCK,
"The market is volatile, but the package was bigger than was expected so that has pressured the dollar and lifted commodities."
JEFFREY PRITCHARD, BROKER AND ANALYST, ALTAVEST WORLDWIDE
TRADING, MISSION VIEJO, CALIF.
"This is going to be supportive for gold in the long run. You may not see it right now but we should see highs before the end of this year."
"There will be more serious buyers in this market if you get to $1,300. If you're a company and you're looking to get a return, you're not going to the bond market."
GEORGE GERO, SENIOR VICE PRESIDENT, FINANCIAL CONSULTANT,
RBC WEALTH MANAGEMENT, NEW YORK
"The buying of $600 billion of long term Treasuries by the end of the second quarter 2011 underpins low rates, which makes gold inexpensive to hold and so the bargain hunters jumped in quickly."
GENE MCGILLIAN, ANALYST, TRADITION ENERGY IN STAMFORD,
"I think the market is showing that a lot of this has been priced in and that is why we haven't shot a lot higher. But the fact that they are going to be doing this much will provide some support for the market -- at least until Friday's unemployment report.
"The dollar seems to be slipping a bit lower and the equity market has gone positive, so the idea that they are going to ease -- and it will be close to a trillion dollars -- is supportive in the near term. Whether that will continue into the long term, we'll have to see how the economic data plays out."
THOMAS BENTZ, VICE PRESIDENT, BNP PARIBAS, NEW YORK
"This ($600 billion) was a little more than the market expected, but crude and products are not running away to the upside. (It's) somewhat positive."
"The market is relatively calm considering how long we've been waiting for this."
JACK SCOVILLE, ANALYST, THE PRICE FUTURES GROUP, CHICAGO
"I think it's going to be viewed fairly positively when we get to the softs markets, mostly on dollar weakness."
"The reaction actually has been reasonably muted (in other markets), to tell you the truth, but it does seem that as word gets around people are starting to buy commodities and sell dollars."
STERLING SMITH, ANALYST, COUNTRY HEDGING INC, MINNESOTA
"All in all, it means more dollars. The debt's going to expand. It should lead to a weaker dollar."
"In general, it's going to be bullish for all commodities. Any commodity that has a good fundamental story is going to have legs on this."
"It will be bullish for commodities in general -- particularly those that are sensitive like sugar, coffee and cotton that have supply issues boosting their markets."
FRANK MCGHEE, HEAD PRECIOUS METALS TRADER, INTEGRATED
BROKERAGE SERVICES, CHICAGO:
"Initially gold's reaction was euphoric given that there was quantitative easing. Then the reality set in that it was really on the very low end of things and the market had at least that much priced in."
TIM EVANS, ENERGY ANALYST, CITI FUTURES PERSPECTIVE, NEW
"While a shift in Fed policy might have some influence on the oil market trading environment, it's not going to have much direct influence on what are still bearish direct fundamentals for crude oil, such as the 32.2 million barrel year-on-year surplus in U.S. commercial crude stocks reported by the EIA this morning."
CARLOS SANCHEZ, PRECIOUS METALS ANALYST, CPM GROUP, NEW
"I would have expected market volatility to pick up after the announcement. It looks like there was some profit taking and stop orders triggered."
"Overall, we still expect gold to head higher for the remainder of the year for the same reasons prices have been heading higher all year namely weak and sluggish economic conditions, vulnerable financial market conditions and an increasingly stressed political environment."
JOSEPH ARSENIO, MANAGING DIRECTOR, ARSENIO CAPITAL
MANAGEMENT IN LARKSPUR, CALIFORNIA
"This is more than the average expectation, but the market has been very optimistic about this and the Fed isn't exceeding expectations sufficiently to prompt another round of commodity inflation."
"More important to the oil market now is demand, which is effectively stagnant in the United States, according to the most recent (EIA) report."
MIKE ZAREMBSKI, SENIOR COMMODITIES ANALYST, OPTIONSXPRESS,
"The $600 billion is probably in the lower end of expectations, but with the mortgage securities it is nearly spot on.
"But the time frame -- to the second quarter of 2011 -- is a little more dragged out than traders had anticipated. There was not the 'shock and awe' that the markets needed.
"The oil market tried to make a run up above $85 (per barrel) but even that market has fallen back now, though not nearly as bad as gold which is trading at the lows of the day.
"If we fail above $85 a barrel again, we could see some profit taking pushing the market back down to the low 80s."