Gold and silver had another downbeat week this week as the FOMC minutes ended up being more bearish than what was anticipated. It was unfortunate for gold and silver investors because the only news of the week, the FOMC minutes, ended up being a bearish factor.
In fact, the only other bigs economic news of the week was the preliminary HSBC manufacturing report from China, which also came back weaker than expected. Next week is the last week of November, and with it being a holiday week in the United States it is likely that investor attention will stray far from continued talk with regard to US monetary policy and its possible upcoming changes.
Bearish FOMC Minutes
In the lead-up to this week, there was a fairly distinct divide amongst investors. One side believed that Quantitative Easing, the Fed’s $85 billion dollar a month bond buying program, would be tapered before the end of this year, while the other side held to the notion that the current rate of growth exhibited by the US economy is not robust enough to merit a tapering of QE. Knowing that, it is easy to see why this week’s FOMC minutes were of such importance to investors of all walks of life.
When the minutes were finally released on Wednesday they made it clear that a majority of the FOMC was in favor of tapering QE “at one of the next few meetings.” This did paint a clearer picture with regard to when QE would be tapered, though investors were not sure whether to interpret the minutes as meaning that QE will be tapered in December or sometime in early 2014. What was clear, however, was that the minutes were in no way favorable for precious metals. In fact, in the hours after the minutes were released, gold and silver suffered their biggest losses from this whole 5 day session.
As we move forward into the last week of November, it is likely that investors will continue to discuss Quantitative Easing’s possible future. With the US looking forward to the Thanksgiving holiday on Thursday, there can be little doubt that it will be a mostly quiet week.