Just three weeks ago stocks and commodities were sent spiraling downward after the Federal Open Market Committee (FOMC) released their economic forecast and U.S. Fed Chairman Ben Bernanke spoke about the tapering of assets becoming a reality by the end of the year.
Fast forward to the release of the Fed’s June meeting minutes today and talk still focused on the pulling back of economic stimulus being dependent on job gains and economic growth. Many in the financial markets concurred that easing of monthly bond purchases by the U.S. central banks could begin as early as September, but reactions in the June meeting could suggest otherwise.
Members in the FOMC agree that a brighter outlook on employment and more economic growth would be needed to slow the pace of asset purchases, but about half of the 19 members were in favor of quantitative easing (QE) by the end of the year. Ultimately, the markets didn’t learn much more than they already knew, as the determining factors in the market remain the same. With the divide in opinions, no one knows for sure what will happen.
Like we stated in our June 20 blog about the economic forecast, an end to asset buying would spark a rise in interest rates, and precious metals are sensitive to interest rate movement. Gold, in particular, has fallen from $1,328.75 an ounce on June 20 to as high as $1,251.92 as of this writing. The fluctuation of prices can be seen as a reaction from the forecast, its correlation with the USD and foreign demand.
Immediately after the July 10 minutes were released, gold rose as high as $1,262.40 due to the possible delay in QE, but some experts don’t believe it will hold due to future tapering on the docket.
What do you think?
Are you still buying gold or playing the waiting game?
Let us know what you think in the comments below or on Facebook and Twitter today.
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