After performing surprisingly well during the first two days of the week, gold and silver have suffered a bit of a pullback on Wednesday. Despite there being no economic news stories for investors to mull over, a move by US lawmakers captured most of the headlines today. With the FOMC policy meeting just around the corner, investors the world over are concerned about the possible outcomes of the meeting.
Budget Deal Reached by Lawmakers
For most Americans, the government shutdown which occurred at the beginning of October is a not so distant memory. During the shutdown, thousands of people were without work and knew next to nothing about when they would be getting paid again. After a few weeks the shutdown was finished, but the deal reached by lawmakers was only a temporary band-aid which meant that there was a chance for another shutdown to happen only a few months down the road. Today it was announced that Democrats and Republicans were able to reach a final budget for this fiscal year.
Though markets did not react too much at all on the news of the budget, the American public was overjoyed to hear that they would not have to suffer through another shutdown. With the budget deal finalized, US lawmakers now have the debt-ceiling debacle to figure out. If lawmakers cannot reach a deal with regard to the debt-ceiling, the US may be forced to suspend its borrowing.
In other news from around the world, it was reported that Chinese banks increased the amount of money they lent out in November. This furthers the belief that Chinese monetary officials want to continue stimulating the Chinese economy, despite the threat of widespread inflation.
As this week enters its latter stages, investors will begin to focus more and more on next week’s FOMC policy meeting. With the timing of QE tapering of the utmost importance to investors, it will be interesting to see if the decision to taper is finally made at this month’s meeting. Though we have been expecting to hear a tapering announcement for well over a half year now, at no point did tapering appear as possible as it does now.