It became increasingly clear this week that the US Fed is set to embark on another round of quantitative easing (QE). The minutes of its last meeting revealed that "many participants" thought further monetary stimulus was needed to prop up the faltering recovery. It will inject printed money into the economy by buying Treasury securities, although it is not yet clear how much it will spend. Analysts expect QE to restart as early as November. In the first round, which finished last year, the Fed spent $1.7bn buying assets, including mortgage-related securities and government debt. The Fed's minutes propelled stockmarkets towards six-month highs and sent gold heading back up to its record of $1,365. It's hard to see why equities should be so thrilled about QE2, given that QE1 didn't work, said David Rosenberg of Gluskin Sheff. For gold, however, it's definitely good news. It implies further dollar weakness and will add to fears that the currency is being debased. That will make gold, which, unlike the dollar, can't be endlessly reproduced by printing presses, more appealing as a store of value. The demand for hard assets that preserve purchasing power is being increased by potential QE in Japan and Britain. And "foreign exchange markets are in a state of disarray" amid a series of "beggar-my-neighbour" interventions to keep currencies weak. So investors fear that "the currency system is unravelling", as one analyst put it in The Observer. Another key worry is that all this QE will lay the foundation for a surge in inflation in the next few years. Note too that central banks have stopped selling the yellow metal and are starting to load up on it, while mine supplies have stagnated. As Morgan Stanley put it, this is "a perfect storm for gold". It may be due a correction after its strong recent run-up, but the long-term bull market looks far from over. Goldman Sachs sees the price reaching $1,650 within a year.