Amark’s Bullion Update

The US Federal Reserve announced yesterday that it would start reducing its $85 billion monthly purchases by $10 billion.  The imminent tapering demonstrates the Fed’s confidence in the sustainability of the US recovery as well as of its prospects for future GDP growth.  However, it also stated that its benchmark interest will stay low “well past the time that the unemployment rate declines below 6.5%”.   In the minutes leading up to and after the FOMC decision, gold and silver traded very choppily.  As the market digested the Fed language, the reaction of the markets took a predictable direction though.  Stocks soared and the precious metals sold off as traders positioned themselves against the Fed’s stance to reign in its balance sheet.   The liquidation pressure from the FOMC has continued for gold today. The yellow metal is down over 3% and has broken below psychological support at $1,200.  Major support for gold waits precariously close at $1,180, the low of the year and a three year low.  It appears that this level will undoubtedly be tested as year-end draws near.

About Fraser

Fraser Moncure is a Precious Metals Trader for A-Mark Precious Metals. He writes a bi-weekly bullion report as he sees it from the inside of the industry.

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