Gold and silver are trading significantly lower for the third consecutive day this week thanks to profit-taking and a lack of any new bullish data to drive metals forward. The Federal Open Market Committee is set to wrap up their monthly policy meeting this afternoon and the marketplace is expecting to hear of another $10 billion reduction to QE.
The crisis in Ukraine is currently simmering on the back burner, but is still on the mind of the investing world as it is far from resolved. Additionally, worries regarding the financial system in China are abounding after a few recent reports.
Outcome of FOMC Meeting Anxiously Awaited
This month’s FOMC meeting is expected to yield the same result as the last few, and that is another $10 billion reduction to Quantitative Easing. Despite recent US economic data being nothing to write home about, the market is expecting tapering to carry on as planned. If this is the case, gold and silver will be feeling even more pressure.
Another reason the market is so interested in the FOMC meeting is due to the fact that Janet Yellen is going to be talking to the press afterwards. Seeing as Ms. Yellen has only been the chairperson of the Fed for a few months, the marketplace is always interested in what she has to say. With that being said, no one is expecting Yellen to say anything we haven’t heard before.
Calming Tensions In Crimea Deflate Safe-Haven Demand
Even though the all-important referendum in Ukraine went Russia’s way, the situation is far from over. The one surprise, however, is that no violence has come as a result of the vote for Crimea to rejoin Russia. While sanctions are being lobbed Russia’s way from both the United States and the European Union, Russia seems mostly worry-free.
The fact that no violence broke out after last weekend’s referendum dealt safe-haven demand for gold and silver a significant blow, seen in the losses posted thus far this week. So long as tensions continue to deescalate in Crimea and across Eastern Europe, gold and silver will need to be given a boost from elsewhere lest they continue to decline like they have throughout the first three days of this week.