The Fed announced it won’t change its monetary policy and keep its ongoing plans of extending operation twist and keeping low rates until late 2014. The FOMC stated it sees signs of slowdown in the U.S. economy. Currently gold and silver prices are falling.
From the FOMC statement:
“The Committee will closely monitor incoming information on economic and financial developments and will provide additional accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability.”
This means no change in current monetary plan but this could change if the U.S economic conditions will deteriorate.
The FOMC referred to the slowdown in the progress of the U.S. economy; the recent non-farm employment report didn’t show much growth (only 80k added jobs); the U.S GDP grew by only 1.5% during Q2 2012; manufacturing PMI index continues to show the manufacturing sector is contracting.
Last month, the U.S. core inflation edged up to an annual rate of 2.2% (for the core CPI). This isn’t something that should bother the FOMC for the near future. The FOMC will keep its pledge of the low interest rates at 0 to 0.25% at least until the end of 2014.
This news may renew the downward trend of precious metals prices.
The table below shows the bullion markets’ reactions to the news of the FOMC during 2012. As seen, in the past two out of three FOMC meeting bullion rates tumbled down the next day.
Euros to US dollar exchange rate is currently traded up at 1.2257 a 0.26% gain as of 09:03*.
Current gold price, short term futures (September 2012 delivery) is traded at $1,604.8 per t oz. a $2.5 decrease as of 08:48*.
Current silver price, short term futures (September 2012 delivery) is traded at $27.38 per t oz. a $0.155 decrease as of 08:48*.
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