Silver is trading lower today following the FOMC announcement. The precious metals markets were mixed throughout much of the day as investors anxiously awaited the highly anticipated FOMC rate decision which is being followed by a Fed Chief Ben Bernanke press conference.
First things first. The fed has elected to hold monetary policy steady for the time being. This really does not come as a surprise. What is interesting to note however, is a lot of the ambiguity surrounding the fed statements. On one hand, Bernanke seems to be pleased with how the economy is handling some of the current headwinds. In fact, the fed has indicated that they feel the unemployment rate could come down to the 6.5% area in 2014.
The fed has also indicated that they feel the economy is continuing to grow and gain some degree of strength. On the other hand, it is obvious that the Fed knows a lot of issues remain that are clearly very large hurdles to more stable and long term economic growth, and therefore the fed is also apparently leaving a backdoor open by talking about how policy will be “data dependent.” Seems a little confusing doesn’t it?
All things being equal, it does not appear much has changed in recent weeks. It does continue to seem however, that the days of super easy money are numbered. The fed just simply appears to be a lot more upbeat on the economy in general, and that might give the fed enough confidence to begin its tapering process sooner rather than later.
Judging from the fact that not long ago the fed anticipated the jobless rate falling to 6.5% in 2015, and now the fed feels that may be seen a full year earlier, it seems that the pullback is quite likely to come sooner rather than later. This has caused the dollar to strengthen quite a bit today, and silver is being sold off further as of this post.
Just how low the market will go no one knows, but it does seem that gold is going to challenge the April lows, and a breach there would most likely also weigh on silver prices. Silver is currently breaking down out of a trading range its been in since June 7th, and also looks poised to challenge its recent lows made in May around the $20.25 area. Should this level give way, prices could head for another significant leg down targeting the $18.50 level.
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