Gold and silver are both hovering around even as the market anxiously awaits the outcome of this week’s FOMC policy meeting. Though the meeting got underway a day ago, it won’t come to a conclusion until sometime this afternoon. While the meeting is officially absorbing the market’s attention, investors are really only waiting to hear what is said in the post-meeting statement.
With gold and silver having declined fairly steadily over the course of the past two weeks, it is no secret that the market thinks we will hear a Quantitative Easing tapering announcement as a result of this week’s meeting.
Markets Waiting Patiently for FOMC News
Even though the FOMC is still in the middle of their meeting, it seems as though the market has already decided what the outcome will be. The losses being posted by gold and silver over the last week or so are indicative of a market that is expecting to hear a tapering announcement sometime in the immediate future. For most, a tapering announcement is expected today, but there are still plenty of people who think a tapering announcement may not be made until sometime in 2014′s first quarter.
For those who are expecting to hear a tapering announcement today, their reasoning is fairly sound. Recently strong US economic data coupled with a quieter political atmosphere are two very good reasons why tapering may be announced later this afternoon.
Despite the increasing likelihood of a tapering announcement being made today, the once prevalent belief that tapering would cause gold and silver spot values to decline dramatically has subsided. This is the case because the market is expecting to hear a tapering announcement and so it will not come as a surprise when it happens. Because of this expectation, the investors who would have sold their precious metals holdings in the wake of tapered QE got a head start and sold off their metals beforehand. This occurrence is being perceived as the market already adjusting to tapered Quantitative Easing.
Nonetheless, investors the world over will patiently wait out these last few hours in hopes of hearing some sort of news with regard to Quantitative Easing and its likely reduction.