Gold and silver are holding steady in the mid-morning hours of Wednesday as investors anxiously await the outcome of this week’s FOMC policy meeting. While there is a large quantity of investors who think we will hear a tapering announcement today, there is no saying for sure whether such will be the case or not.
Gold and silver have not fared too well so far this week, highlighted by yesterday’s decently large losses.
Policy Meeting and Possible Outcomes
As the FOMC puts the final touches on their meeting, the investing world is brimming with eager anticipation. The post meeting statement, typically made by Fed chairman Ben Bernanke, is the event that will have every investor’s attention.
With US economic data as strong as it has been recently, investors are growing more confident that this week’s meeting will finally yield a reduction to Quantitative Easing. After all, members of the Fed who have come out as opposing a more immediate tapering have cited slow economic growth as their main reasoning. Now, with US economic growth seemingly on the up and up, many investors feel as though the FOMC will have no choice but to taper this time around.
Others, however, are not so sure that the Fed will announce tapering this afternoon. Some investors think that it will not be until sometime in 2014 until the easy money policy is reduced. Regardless of when QE is actually tapered, it seems as though the market is already factoring in the announcement. Because the market is and has been expecting the monetary policy to be reduced, it will not be such a shock when it actually happens. Not only that, but the fact that the market has been expecting QE to be reduced only means that those who would have sold their gold and silver upon a tapering announcement have likely already done so. This can be seen in the last few weeks’ worth of declining gold and silver spot values.
While there was some positive economic news out of the EU earlier this week, things across the globe seemed to have calmed down a bit.