Gold Spot Price Open: $1,230
Gold Spot Price Close: $1,211
Change in Gold Spot Price: -$19
Silver Spot Price Open: $17.29
Silver Spot Price Close: $17.14
Change in Silver Spot Price: -$0.15
Precious metals spent most of the day Wednesday trading sideways, but in the wake of a somewhat hawkish post-meeting statement by the FOMC, spot values immediately moved downward. When all was said and done, gold lost close to 20 dollars while silver suffered losses somewhere in the neighborhood of 15 cents. Platinum and palladium didn’t fare entirely too well either, having both lost marginal amounts of value.
Hawkish FOMC Statement Lifts Dollar, Dooms Metals
As expected, the Fed, in its post-meeting statement, announced that quantitative easing measures, known as QE3, were finally being brought to an end. Though this news didn’t really shock the market all that much, the Fed’s more upbeat outlook on the US economy did. Though the Fed reiterated that interest rates would be left unchanged for a “considerable” amount of time still, it was alluded to that more economic progress in the US may lead to rates being raised sooner than expected. Over the course of the past few months, most economic data from the US has been upbeat, so it is nice to finally see the Fed comment on the progress we have been seeing for some time now.
As you could have probably guessed, such a hawkish statement from the FOMC gave the US Dollar a significant boost while simultaneously putting more pressure on gold and silver. The USD Index, which measures the greenback against a slew of global currencies, trended near even to slightly downward for much of the day, but upon the release of the FOMC statement spiked upward and ended the day more than half a percentage point higher than where it had started. As expected, the Euro currency declined as today’s statement only made it clearer that US and EU monetary policies are heading in opposite directions.
Today’s hawkish post-meeting statement took its toll on US equities, which were performing well prior to the conclusion of the Fed’s most recent meeting.
German 10-Year Bonds Fetch Record-Low Yields
During the early morning hours of Wednesday, a German government bond auction saw average yields slip to record-low levels of .87%. Though demand for the bonds is currently being described as average, the surprisingly low yields suggest that investors are still wary about the economic and financial strength of the EU. As the undisputed leader of EU economies, many analysts look to German bond auctions as a way to determine how investors, on the whole, feel about the EU economy.
At present, the general outlook on not only the German economy, but all economies across Europe, is very bearish and only seeming to grow worse with each passing week.
Global Central Banks Reportedly Stocking Up On Gold Bullion
According to the International Monetary Fund, or IMF, several world banks were seen stocking up large quantities of gold bullion during September. According to the report, the central banks of Russia, Azerbaijan, and Kazakhstan all increased their gold holdings throughout September. Russia added more than any other, by stocking up on more than 1.2 million ounces of physical gold.
Wrap-Up
Looking ahead to the last two days of this week, it is likely that we will continue to see delayed reactions stemming from the FOMC’s statement today. Because the statement was made after markets closed in Europe and before they opened in Asia, you can expect global investors to react tomorrow and into the last day of the week. It will also be interesting to see if stocks and precious metals are able to bounce back from today’s hawkish remarks, or if trends will continue moving downward.
