Gold Prices leapt as London dealing ended on Wednesday on news that the US Federal Reserve is creating $300 billion to buy long-dated Treasury bonds, plus another $750bn to buy mortgage-backed debt from Fannie Mae and Freddie Mac.
Citing the "risk that inflation could persist for a time below rates that best foster economic growth and price stability in the longer term," the Fed sparked a 5% jump in the Gold Price, plus a 3¢ jump in the European single currency to 10-session highs.
Gold had previously drifted as low as $886 an ounce amid analyst comments that the Fed would not move to buy US government debt with freshly-created reserves – effectively "monetizing" Washington's financing needs in a bid to boost the money supply, devalue the Dollar, and reflate the ailing economy.
Wall Street stocks also jumped on the news, though less dramatically, driving the S&P 500 index up 2.5% from an earlier loss.
The Fed also kept its key overnight interest rate on hold between zero and 0.25%.
Its purchase of US Treasury bonds sent the government debt market soaring, squashing the yield offered by 10-year notes down a massive half-a-per-cent to 2.53%.
Thirty-year Treasury yields sank to 3.45% – down sharply from Wednesday morning's new four-months high – as their price leapt on news of the Fed's $300bn buying intentions.