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Gold & Silver Slump After FOMC Announcement

October 29, 2014 at 22:21 by Vladimir Vyun

Prices for gold sank today after the Federal Open Market Committee announced an end to its quantitative easing program. Silver followed in decline. The FOMC said that labor market demonstrated positive developments and long-term inflation expectations remained stable despite inflation being subdued at present. While it is expected that interest rates will remain low for a long time, the statement mentioned a possibility of an early rate hike:

If incoming information indicates faster progress toward the Committee’s employment and inflation objectives than the Committee now expects, then increases in the target range for the federal funds rate are likely to occur sooner than currently anticipated.

With low inflation and potential for higher interest rates, investors felt no need to buy gold. Speculators ran to the US dollar, which jumped after the FOMC announcement, abandoning gold and silver. As a result, prices for the precious metals slumped.

December futures for gold dropped 0.36 percent to $1.224.90 per troy ounce as of 22:14 GMT on COMEX today after sinking by 1.3 percent to 1.60 percent to $1208.2 earlier. Contract for silver lost 0.85 percent to $17.08 per ounce.

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