Precious Metals Quietly Wait for the Federal Reserve
On Tuesday, gold (NYSEARCA:GLD) futures for August delivery dipped $4.40 to close at $1,324 per ounce, while silver (NYSEARCA:SLV) futures for September edged 18 cents lower to finish at $19.68.
Both precious metals remained relatively quiet, as the market awaits the latest take on the economy from the Federal Reserve. On Wednesday, the central bank’s Federal Open Market Committee will conclude its two-day policy meeting. Officials are set to keep purchasing bonds at a pace of $85 billion per month, but other market-moving changes may occur.
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The central bank has promised that interest rates will stay low until the unemployment rate falls to at least 6.5 percent, so long as inflation remains below an annualized 2.5 percent. However, it could provide a more dovish stance in order to calm any “tapering” fears in the market.
David Song, currency analyst at DailyFX, explains, “There’s growing speculation that the FOMC will shift the forward-guidance in favor of its highly accommodative policy stance, and we may see a sharp selloff in the greenback, should the committee reduce the thresholds for unemployment and inflation. However, we may see a growing number of central bank officials turn increasingly upbeat towards the economy, as they anticipate a faster recovery in the second-half of 2013.”
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By the end of the trading day, shares of the SPDR Gold Trust (NYSEARCA:GLD) declined 0.30 percent, while the iShares Silver Trust (NYSEARCA:SLV) fell 0.60 percent. Barrick Gold (NYSE:ABX) shares dropped 2 percent, but Newmont Mining (NYSE:NEM) managed to edge slightly higher. Meanwhile, shares of Silver Wheaton (NYSE:SLW) gained nearly 1 percent.
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Disclosure: Long EXK, AG, HL, PHYS