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Gold Slightly Weaker on Mildly Bearish FOMC Statement

March 20, 2013 - The price of gold ended the U.S. day session trading slightly lower with a modest extension of losses following a bearish state from the Federal Reserve following the FOMC meeting that took place over the last two days in Washington.

The spot price of gold drifted $5.22 or 0.40 percent in markets to $1,606.35 per troy ounce. U.S. gold futures for April delivery lost $4.30 or 0.27 percent to $1,607.00 per troy ounce.

On Wednesday afternoon the Federal Open Market Committee, the policy-making committee of the Federal Reserve, announced it would leave monetary policy unchanged. The move was not entirely unexpected though recently upbeat U.S. economic data aroused anticipation the Fed would announce a pullback in quantitative easing. Members of the committee, minutes from prior meetings released in February revealed, leaned toward a pullback in easing. The vote of the current meeting showed and 11 to 1 preference to keep the course of monetary policy steady.

The Fed has also said it would keep a very close eye on the progress of U.S. economic growth.

Forbes’ analysis details the Fed, while keeping monetary policy very accommodative, is beginning to lay the groundwork for an exit strategy to the extraordinary and controversial quantitative easing program. The Fed had previously tied its bond-buying program to the health of the labor market, though those ties appear to have faded somewhat in market perception.

Fed Chairman Ben Bernanke held a press conference following the conclusion of the FOMC meeting in which the Chairman said nothing market sensitive, according to Forbes.

The controversy over the European Union and International Monetary Fund bailout package for the debt-beleaguered Mediterranean nation of Cyprus is likely to resume an influential aspect in markets following the FOMC press conference.

The Cyprus parliament voted on Tuesday to reject a proposal to tax the bank deposits of citizens in order to secure a bailout package. The market considered the proposal could lead to similar measures being adopted in other troubled European economies. The reemergence of the European debt troubles, though uncertain for the global monetary system, have been supportive of the precious metals markets as investors again sought safe haven in precious metals.

Daily Updates Archive

Jonathan Monroe

Senior Staff Writer -

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