Gold Spot Price Open: $1,231
Gold Spot Price Close: $1,220
Change in Gold Spot Price: -$11
Silver Spot Price Open: $19.91
Silver Spot Price Close: $19.79
Change in Silver Spot Price: -$0.12
Gold and silver declined a little bit as the FOMC finally decided to taper its monthly bond-buying policy, also known as Quantitative Easing. When all was said and done, gold lost about 11 dollars while silver lost closer to 12 cents.
As was anticipated by the market, the FOMC finally decided to taper its $80+ billion monthly bond-buying policy, but only by about $10 billion monthly. Gold and silver ended up taking a hit because of the Fed’s decision, but the fact that tapering was much lighter than expected might end up working out in precious metals’ favor.
The Fed came to their decision based upon two major factors, improving US economic data as well as an improving labor market in the US. The $10 billion reduction to QE will wear two different hats. Starting next month, the Fed will reduce its Treasury bond purchases by $5 billion while simultaneously reducing their purchase of mortgage-backed securities by the same margin.
In his post-meeting statement, Federal Reserve chairman Ben Bernanke alluded that the Fed may pursue similar tapering decisions at policy meetings throughout 2014. Many investors are interpreting this as meaning that the Fed is looking to completely do away with QE by this time next year. Whether this is actually the case or not remains to be seen, though it will not stop investors from their speculation.
Bernanke also went on to say that his possible successor and Fed vice-chairperson Janet Yellen also supports his decision to taper starting next month and possibly pursue similar tapering decisions throughout the course of 2014. Today’s decision is a big one, but was also more or less expected by the market. As we move forward toward the latter stages of this week and the beginning of next week it will be interesting to see what direction gold and silver head in.
