Precious metals are feeling pressure today, but are up from daily lows as of the writing of this post. After yesterday’s FOMC meeting and post-meeting statement were deemed by the market as being a bit more hawkish than expected, it should come as no surprise that gold and silver are on the chopping block today. With that said, however, there are still reports streaming in, claiming that physical purchases of metals have risen dramatically in Asia as a result of the recent toppling of the value of gold and silver.
In other news, the market’s attention will slowly but surely shift from the FOMC meeting to the Scottish referendum on independence, which is taking place today. This incredibly important vote will determine whether Scotland remains part of the United Kingdom or if they will become independent. The British pound and overall British economy has a lot riding on the outcome of the referendum, so it will be very interesting to see how things play out over the next 24 hours or so. Though the vote is taking place today, it is highly likely that we won’t receive the official results until sometime during the overnight or early morning hours tomorrow. This means that we are in for one exciting finish to the trading week.
FOMC Minutes Do Metals No Favors
Apart from Scotland’s vote on independence, the biggest event of the week was no doubt the Federal Open Market Committee’s latest policy meeting. In recent months, there has been almost consistent discussion with regard to when the US will be raising interest rates, and by how much they will be raised. You see, at this juncture, investors aren’t curious whether rates will be raised or not, because they are confident rate hikes are on their way. What they are curious about, however, is how a rate hike might affect them and their investments.
Unfortunately for most everyone, the FOMC members did not offer much in the way of solid information regarding the future of interest rates. Instead, they simply reiterated many of the things they have been saying for the past few months now. Though their gauge of the US economy’s strength has grown a bit more optimistic in the eyes of many, the FOMC insisted that there is still room for improvement–especially as it pertains to the United States’ labor situation.
What did make this week’s meeting a bit more hawkish than expected was the fact that there were 2 dissenters present amongst the FOMC. This, to the market, indicates that some FOMC members might want to get on with rate hikes sooner rather than later. This alone helped pile on the downward pressure being felt by gold and silver.