Commodity Blog

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Fed Tapers, Gold Suffers

April 30, 2014 at 23:40 by Vladimir Vyun

Gold fell today after the Federal Reserve announced another round of quantitative easing tapering. The Fed said in the statement:

Beginning in May, the Committee will add to its holdings of agency mortgage-backed securities at a pace of $20 billion per month rather than $25 billion per month, and will add to its holdings of longer-term Treasury securities at a pace of $25 billion per month rather than $30 billion per month.

Such decision was largely expected. The dollar dropped after the announcement, but the drop did not help gold to rise. It looks like risk-on trading make the precious metal unnecessary in its role of a safe haven, yet the global economic growth is not strong enough to warrant usage of gold as an inflation hedge.

June futures for bullion retreated $4.40 (0.34 percent) to $1,291.90 per troy ounce as of 23:38 GMT on COMEX today. Other precious metals fared a bit better.

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