Gold and silver did not fare any better this week than last week as the bearish FOMC minutes ended up putting even more downward pressure on gold and silver. Apart from all the talk regarding US monetary policy, some downbeat economic data out of China was yet another factor working against the spot values of gold and silver.
As we move into the last week of November, a holiday week for those in the United States, it is likely that investor talk will focus solely on the future of monetary policy in the United States.
FOMC Minutes Yield Surprising Outcome
Before the week had even started, investors from all over the globe were talking about one thing and one thing only, Wednesday’s FOMC minutes. Some people entered this week thinking that Quantitative Easing, the Fed’s $85 billion dollar a month bond buying initiative, was going to be tapered at the upcoming December FOMC meeting, while an even stronger contingent adhered to the notion that the Fed will not touch the monetary policy until sometime in the middle of 2014.
For this reason, when the minutes were released and they revealed that a majority of the FOMC is in favor of a more immediate tapering of QE, the marketplace was admittedly surprised. Gold and silver suffered their biggest losses of this 5 day session in the immediate aftermath of the FOMC minutes release. Members of the FOMC also agreed that the US economy is growing at a moderate rate.
Now, it is unclear whether the FOMC will begin tapering Quantitative Easing this December or wait until sometime early in 2014. Many market experts have been quoted saying that there is a slim chance the Fed will actually follow through with tapering QE until the unemployment rate and weekly jobless claims decline a bit further than where they are both at now.
Apart from the FOMC minutes, there was not really many other stories able to move the spot values of gold and silver too drastically in one direction or another. One of the reports worth mentioning this week was China’s preliminary HSBC manufacturing reading for November. This piece of data proved to be bearish for precious metals as November’s preliminary report came in weaker than this past Octobers. Compared to an October reading of 50.9, November’s preliminary reading came in at 50.4. The HSBC manufacturing index may mean nothing to you, but to keep it simple, all you need to know is that any reading above 50 is indicative of a healthy, growing economy. Even though China’s economy is still in good shape, raw commodities took hits across the board because of this week’s lower than expected reading.