QE3 is a mechanism wherein the central bank buys financial assets to inject more liquidity into the system to push economic growth. Thus more money sparks a rally in commodities, including gold. However, the problem with quantitative easing is that it tends to push inflation higher.
On Multi Commodity Exchange (MCX) gold for April delivery was down by Rs 232 at Rs 27,685 per 10 grams at 2.45 pm IST, while the metal for June delivery dipped by Rs 295 to Rs 28,150 per 10 grams. Silver for May delivery on MCX was down by Rs 984 at Rs 56,583 per kgs.
International spot gold was sen trading at US$ 1630 a troy ounce.