Gold and silver posted small gains to close out what has been a somewhat impressive week for metals. After a rocky first two or three days, gold gained footing on Thursday and it along with silver were able to post impressive gains. As market analysts become more and more certain that the US stock market climb that has been going on for the past almost 5 years is coming to an end, those same analysts are curious to see if precious metals’ gains this week are going to translate into an extended bullish run.
Next week’s FOMC policy meeting is the talk of the marketplace and likely will continue to be until the meeting comes to a conclusion sometime in the middle of next week. As it stands the market is expecting to see the Fed taper QE by another $10 billion per month.
US Stocks Lagging, Could Be Deflated
As a result of the worldwide recession of 2008, US stock indexes slumped to record lows late in 2009. Since then, however, most US equities have slowly clawed their way back and have recently posted gains that many would have thought to be impossible only 4 years ago. Thanks to gold and silver’s gains the last few days, many market analysts are beginning to wonder if US equities may be on the verge of cooling off and correcting themselves. This growing belief, coupled with the fact that easy money is slowly exiting the marketplace means that stocks may have just seen the last of their glory days, at least for now.
If QE is, in fact, reduced by another $10 billion as a result of next week’s FOMC meeting it will undoubtedly spell bad news for US and world equities. Though it is also likely that further QE reduction will boost the USD, another tapering move may be just what precious metals need to propel them into making an extended bullish run. Gold has finally crossed over the key $1,260 threshold and we will find out if the yellow metal will be able to hang on to those gains come Monday morning.
Expect the trading atmosphere to be quiet in the early running of next week as many investors will await the outcome of the FOMC meeting before they think about making any major investing moves.