Today’s AM fix was USD 1,366.00, EUR 1,019.86 and GBP 874.91 per ounce. Yesterday’s AM fix was USD 1,378.50, EUR 1,030.35 and GBP 880.32 per ounce.
Gold fell $16.60 or 1.2% yesterday and closed at $1,367.10/oz. Silver finished down 1.01%.
Gold’s weakness continues and gold is now near the lowest level in four weeks, as a liquidity driven rally in stocks and investor caution over the Federal Reserve’s monetary policy is contributing to a nervous gold market.
Fed Chairman Ben Bernanke said last month the bank could scale back its $85 billion monthly bond purchases if the U.S. economy strengthens, but a lack of clarity on the timing has unsettled markets. A policy statement from the central bank will be released today after its meeting.
Expectations are that the Fed may scale back its extremely unusual $85 billion per month debt monetization program to $60 billion a month and continue with near zero interest rates.
Both of which would be bullish for gold.
It would be very bearish for gold and silver if Bernanke was to indicate that bond buying would be phased out completely and interest rates allowed to rise to historic norms. However, given the very fragile nature of the U.S. recovery, a return to conventional monetary policies is not going to happen any time soon.