The FOMC ended their last meeting of the year with the decision to taper QE3 by $10 billion. This means, the asset purchase program declined to $75 billion per month starting next month. The FOMC reduced $5 billion from each type of assets: mortgage backed securities and long term treasuries. The gold and silver market didn’t have much of a reaction as both precious metals slightly rose. But currently both metals are trading sharply down. Albeit the FOMC announced the tapering of QE3, it has also made additional announced that may have reduced this decision’s effect on the markets including: revise up the outlook for U.S economy in 2014, no guideline for the next tapering, and could keep rates low until late 2015. On the other hand, Bernanke voiced his concern about the inflation; future moderate tapering will continue next year and may end QE3 by late 2014. On today’s agenda: Philly Fed Manufacturing Index, Euro Area Current Account, U.S. Jobless Claims, and U.S. Existing Home Sales.
On Wednesday, gold slightly rose by 0.4% to $1,235.7; Silver, by 1.12% to $20.02. During December, gold declined by 1.18%; silver inched up by 0.1%. The ratio between the two precious metals slipped on Wednesday to 61.73. During December, the ratio slightly slipped by 1.28% as silver has moderately out-performed gold.
This decision is likely to cut down the prices of gold and silver as this decision was a bit surprising. The FOMC kept the timing of tapering QE3 close to the vest. This recent decision is likely to further pull down gold and silver, at least in the short term.
On Today's Agenda
U.S. Jobless Claims Weekly Report: In the recent report the jobless claims sharply rose by 68k to reach 368k; the next weekly report may affect the U.S dollar and consequently commodities and equities markets;
U.S. Existing Home Sales: This report will show the shifts in U.S. existing home sales during November 2013; in the last report regarding October 2013 the number of homes sold fell to a seasonally adjusted annual rate of 5.12 million houses; if this trend persists, it might adversely affect the U.S dollar;
Philly Fed Manufacturing Index: This monthly survey estimates the growth of the US manufacturing sectors. In the last survey regarding November, the growth rate fell from +19.8 in October to +6.5 in November. If the index continues to fall, it may adversely affect not only U.S Dollar but also U.S equity markets and commodities (the recent Philly Fed review);
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