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Gold Bullion Spot Price Falls Ahead of FOMC Minutes

November 20, 2013 - The Federal Open Market Committee’s October meeting supposedly covered a lot of ground in terms of the progress (or lack thereof) being made by the United States in terms of an economic recovery. The minutes from that meeting are set to be released to the public tomorrow, and hopeful optimism on the part of investors has translated into slightly lower gold bullion prices for the trading session. As of 4pm EST the gold bullion spot price had fallen $2.80 to $1272.60 per ounce.

Notes from October’s FOMC meeting, due to be released Wednesday afternoon, are typically more superficial than substance. For instance, recent FOMC meetings have done little to quell investors’ fears that the U.S. economy is on the verge of collapsing. Fed chair Ben Bernanke and his likely successor, Janet Yellen, seem convinced that the strategy of heavy printing of currency, quantitative easing and low interest rates is promising, despite the fact that our economy is obviously still stagnant years after these measures were first deployed.

While some Fed governors have countered Bernanke’s claims of recovery with facts and data, the Fed chairman has been adamant that 0% interest rates have spurred job growth through increased corporate borrowing for expansion. Inflation has been a key driver for gold over the last 12 years, but media outlets have consistently quoted the inflation rate as less than 2%. This figure doesn’t account for food and energy cost increases, which are in the double digits.

Regardless of what comes out with the FOMC minutes tomorrow, the numbers don’t lie. As long as interest rates are below 1% and inflation is only obvious to the most savvy of investors, gold bullion values will likely stay flat or go down. History has proven, however, that raising the interest rate could push gold to never-before-seen heights, as was the case during the rising interest rate cycle of 1960-1980. If something similar happens in this cycle, predictions of sky-high gold bullion prices from economists like Peter Schiff that seem ludicrous now may seem reasonable over the next few years.

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Jonathan Monroe

Senior Staff Writer - Gold-Bullion.org

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