It could be a volatile week for precious metals with the Federal Reserve expected to stop QE3 on Wednesday

The Federal Reserve will announce on Wednesday whether they are to stop QE3. By injecting newly created currency units into the economy via the purchase of U.S. debt, stock markets have soared and bond values have risen to historic highs. If the Fed does exit QE many expect the gold, silver and stock markets to fall.

With the fear of deflation taking hold across Europe the Fed may decide it’s the wrong time to finally eliminate QE3, which is turn will be positive for both gold and silver. Only two weeks ago Fed Official James Bullard said the Fed should maintain QE3 until the U.S. and European economies are stronger.

Whether or not the Fed finally stops QE3 it is becoming more and more likely the ECB will start its own quantitative easing program in attempt to stop the 18 member Eurozone falling into a deflationary spiral. Only last week the ECB start purchasing French denominated assets an attempt to stimulate the Eurozone economy.