Gold and silver have both lost significant amounts of value today, though their declines have lasted well over a week now. After yesterday’s FOMC minutes were more bearish than anticipated it is unlikely that gold and silver will be able to regain momentum anytime soon.
The marketplace is continuing to digest yesterday’s FOMC minutes as well as beginning to digest today’s economic reports. While this renewed decline of precious metals spot values is terrible for those holding metals now, it has translated into bargain-hunting buying already.
Outcome of the FOMC Minutes
Yesterday came and went, but what happened during the day was of particular importance to investors. The FOMC’s latest minutes were due out a day ago, and what they had to say shocked the world marketplace. In the minutes, many members of the Fed made it clear that they would be in support of reducing Quantitative Easing at one of the next upcoming meetings. There is no saying whether this means that QE is likely to be reduced this December like so many people originally had thought, or whether it simply means that QE will be tapered before the middle of 2014.
Regardless of the tapering of QE’s official timetable, investors reacted and continue to react as though QE will be done away with in the very near future. The spot value of gold has sunk beneath the $1,250 mark while silver is showing equally disappointing numbers having dropped below the $20 threshold this week.
Despite yesterday’s FOMC minutes, some investors are still hanging on to the belief that QE will not be touched until jobs data in the US improves. If this is the case, the next few weeks’ worth of US jobs data will be heavily scrutinized by the majority of worldwide investors. It is interesting to see the world marketplace focus so heavily on one country’s monetary policy and its potential future, but with few other inputs able to move the value of gold and silver too drastically in one direction or another it really isn’t all that surprising.
The only other news to report on Thursday involved China’s preliminary HSBC manufacturing report, which showed a decline from October to November. Though the official reading was indicative of a healthy Chinese economy, November’s reading was slightly weaker than October’s which translated into more bearish news for precious metals.