Gold price rallies $55 after Fed shocker

Chairman Ben Bernanke was expected to announce a $10 billion $20 billion reduction in the bank's asset purchase program which was running at $85 billion a month, but a 9:1 vote put off a decision in a move that come as something of a shocker to markets.

The Fed statement cited a darkening employment outlook and said recent spikes in market interest rates and government spending cuts were "restraining economic growth."

After a more modest initial jump, the gold rally gathered steam during a press conference after the FOMC announcement.

As today's decision underscores, asset purchases are not on a preset course

Bernanke explained: "As today's decision underscores, asset purchases are not on a preset course," adding that while it may still happen this year, it would depend on the US economic environment at the time and "confirming evidence."

The bank’s QE program, which has pumped more than $3.6 trillion of easy money into financial markets, weakens the dollar and increases the risk of inflation.

QE burnishes gold’s status as a hedge against inflation and a storer of wealth.

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