Commodities rose higher on the announcement of more quantitative easing. But have fallen back. One commodity, weak all year, still has room to run, Barclays Capital analysts said in a note to clients Tuesday. Gold is a buy, the commodities team of the London investment behemoth said Tuesday, joining a growing chorus of bullion bulls.
QE3 weakens the dollar. That's good for U.S. export companies and good for the U.S. government. Exports become cheaper to overseas buyers, and the U.S. gets to pay lower interest on its debt to bond holders. But with dollar debasement moving back to center stage, QE3 is likely to support the recent pickup in gold buying and that should help to bring to an end gold's position as one of the weakest commodity markets in 2012, Barclays forecasts.
"Without fundamental support, liquidity-driven rallies are likely to fade fast for most commodities, especially since prices of many of them are already much higher than at the start of previous QE events," Barclays analyst Kevin Norrish from London said in the note.
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