June 19th Midweek Gold Market Update

Gold and silver both made some small gains in the early parts of Wednesday as the Federal Open Market Committee meeting is still going on. Most world markets have been quiet for the large part of yesterday and in the early parts of Wednesday, though that will likely change by this afternoon. Keeping with recent market trends, the US Dollar has done little movement in the overnight and early morning hours of Wednesday. Apart from the ongoing FOMC meeting, precious metals investors are taking a notice to the civil unrest that is happening in both Turkey and Brazil. Should either or both of these situations escalate from the tumultuous spots they’re in right now, we could see some new safe-haven demand for both gold and silver.

FOMC Meeting and Speculation

The Federal Open Market Committee, commonly referred to as the FOMC, is the branch of the the US Federal Reserve that is in charge of deciding and implementing monetary policies. They typically meet at least once a month, but very few of these meetings have the major implications that this particular one has.

Quantitative Easing is the monetary policy in place in the United States now, and has been that way for some time. QE works by pumping large quantities of money into the economy in an effort to devalue the US Dollar. A devalued dollar makes for more attractive exports which, in turn, gives the economy a boost. Up to this point it is generally agreed that QE has fulfilled its purpose and that it is no longer necessary, but there are those who disagree with this thought.

No matter how much speculating is done, we will still have to wait until later this afternoon to hear what the outcome of the meeting is. Ben Bernanke’s post-meeting press conference will undoubtedly help investors decide whether they should be selling or buying gold and silver. 

Rest of the World Outlook

This FOMC meeting is sucking up most investor’s attention, and for this reason most other economic activity around the world is subdued. This is seen in the fact that Asian and European stock markets are posting mostly stagnant, mixed results on Wednesday. US monetary policy means a lot to people all over the world, not just those in the US. The outcome of this meeting will be dwelt upon and likely have a big influence on how investors will act in the coming days and weeks.

The US Dollar is also holding its position on Wednesday, likely due to the fact that the FOMC meeting is still going on. As you can see, this meeting seems to be the only thing people are talking about this week.

Rounding Out the Week

As we move into the second half of the week it will be interesting to see how investors react to the outcome of the FOMC meeting. Since this is more or less the only groundbreaking story in the news this week, it will have major impacts, one way or another, on the precious metals market.

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