Gold & Silver gains from Fed's no taper decision erased, ends week flat
LONDON (Sept 22) The precious metal ended the week flat, while it was boosted on Wednesday after the Federal Reserve (Fed) decided to leave its easing policy unchanged at $85 billion a month. Nevertheless, on Friday, the commodity futures retreated erasing more than 3% and sending prices back to levels seen at the closing a week before.
Gold futures rose from $1,325.50 an ounce to $1,325.90 an ounce over the week, which is an increase of 0.03%. The yellow metal was traded pretty much flat until Wednesday only to jump after the decision.
September has historically been gold's best month of the year, associated with strong gold demand. Taking into account 40 years of positive monthly returns, the precious metal has seen its biggest increase this month, averaging 2.3% according to Bloomberg data.
The Fed surprised markets on Wednesday after its two-day policy meeting revealed that the central bank had decided not to reduce the monthly pace of its stimulus measures, as policymakers think the US economy is not yet strong enough for tapering. Many analysts had expected that the bank would trim its program by at least $10 billion.
The central bank will continue buying $40 billion worth of mortgage-backed securities and $45 billion of treasuries, while as expected, the target for the federal funds rate remained unchanged at 0% to 0.25%.
The official statement said that "the committee decided to await more evidence that progress will be sustained before adjusting the pace of its purchases."
"The committee sees the downside risks to the outlook for the economy and the labor market as having diminished, on net, since last fall, but the tightening of financial conditions observed in recent months, if sustained, could slow the pace of improvement in the economy and labor market," the statement continued.
The statement also showed that the world's largest economy is forecast to grow between 2% and 2.3%, lower than the previous projections of a rise between 2.3% and 2.6%.
Markets were not given a clear indication of when tapering would begin as Fed Chairman Ben Bernanke said that "there is no fixed calendar schedule."
India's imports of bullion may reach 750 tonnes in the fiscal year ending March 31 2014, representing a fall of 11% compared to the previous year, an Indian government official said.