Gold price falls after Fed holds
Gold fell below $1,350 an ounce on Wednesday, after a US Federal Reserve decision to keep its stimulus program in place.
In early afternoon trade on the Comex market in New York December gold futures changed hands at $1,338.20 down $7 or 0.5% from yesterday’s close, but off sharply from highs near $1,360 an ounce ahead of the Fed announcement.
The Federal Reserve voted 9-1 on Wednesday to continue monthly asset purchases of $85 billion a month, citing an elevated unemployment rate of 7.2% versus the bank’s target of 6.5%.
The Fed said it is awaiting more evidence of strength in the US economy and that Washington’s economic policies are holding back growth which it characterizes as “moderate” although the jobs situation in the country has experienced “some further improvement.”
Expectations vary widely on when the Fed will throttle its asset buying program which is set to top $4 trillion by the end of the year, but few expect it to be this year and some economists only see cutbacks in Spring of next year.
The anemic nature of the US economic recovery bolsters the case for keeping the spigot open with more evidence on Wednesday – private sector hiring coming in under expectations – that more Fed stimulus is needed.
More News
{{ commodity.name }}
{{ post.title }}
{{ post.date }}
2 Comments
anon
Can someone tell me why this happens? Didn’t gold drop throughout early 2013 because of there was a plan end the stimulus? Now the stimulus continues and gold drops? Confused…
JImmy
It appears as though there has been a change in buying sentiment. Late 2012, everyone was concerned the fed would stop tapering, or would go off a fiscal cliff. Gold was an asset to people as printing money obviously devalues the currency.
However following the knock down below $1550/ounce to the low levels it is at now, Gold is struggling to gain a foothold. Buyers are now seeing the lack of tapering from the FED as continued boosting of the stock market. People are sticking with stocks as they believe it will keep on rising as long as the fed keeps printing. Event though the fundamentals are still the same, that gold should be rising as more money is printed.
I believe eventually, maybe a year away when things start to crumble, and the stock market falls (possibly due to the fed stoping tapering, or the US defaulting on its debts), that money will flood back into Gold and Silver. However for now, its a hard road if you are a precious metals purchaser.