Closing Gold & Silver Market Report – 2/20/2013
February 20, 2013QUANTITATIVE EASING TO END? MARKETS REACT TO FED MINUTES
As signs of U.S. economic improvement continue, the Federal Reserve has announced plans to convene in March to discuss the suitability of the $85 billion in asset purchases currently taking place each month. Many Fed committee members are concerned about the long-term risks of the current stimulus program causing speculation over probable alternatives to existing monetary easing measures. Factions have sprouted up inside the Fed committee as those who propose an end to quantitative easing (QE) are opposed by members who believe a premature end to QE could negatively impact the economy.
The Fed’s minutes from January, which indicated a potential halt of asset-buying, has caused Gold to tumble to its lowest level since last July. Today’s decline was the largest single-day drop in almost one year. QE has been instrumental in driving the Gold price up since its inception. The announcement that stimulus measures could come to an end has caused today’s drastic price drop for the yellow metal as the appeal of Gold as an inflationary hedge has been temporarily cut short. “The economic data is telling us that the economy is definitely showing signs of improvement,” Vedant Mimani, a portfolio manager at Atyant Capital Management Ltd., said. “A lot of sellers came in after Gold broke below the psychological $1,600 mark, and concern about the end of stimulus is adding further pressure.” Though economic improvements have led some to seek out riskier investments, many are looking to the recent price pull-back as an excellent buying opportunity as Gold has historically proven to be excellent portfolio insurance and an asset that is more resilient to volatility than stocks and other equities.
At 5 p.m. (EST), the APMEX Precious Metals spot prices were:
- Gold, $1,565.00, Down $40.70.
- Silver, $28.59, Down $0.91.
