Wednesday the Federal Reserve announced plans to continue drawing down their bond-buying activity, triggering a drop in precious metals markets, with gold closing at 1,341.30 per ounce and silver at $20.83 per ounce.
The Fed has long intimated that leaders feel the economy is sufficiently improved that the organization no longer needs to prop up the economy, but investors have been waiting to see what, exactly, that would mean. Yesterday’s announcement indicated the Fed would spend $10 billion less on bonds, down to $55 billion a month, beginning in April.
However, the Fed announcement also said changes to interest rates would come not when unemployment fell below 6.5%–the previous threshold–but instead would measure the economy and employment rate in a more “quantitative” manner.
(The unemployment rate in February was at 6.7%, with Fed leaders suggesting it may fall as low as 6.1%.)
This change in policy means the incredibly low interest rates may be around much longer. Fed chairwoman Janet Yellen said rates will remain low for a “considerable period.” While precious metals investors–among others–were initially spooked, these low interest rates may signal that a safe haven investment is still favorable.
