Closing Gold & Silver Market Report – 04/03/2012

Brandi Brundidge

4/3/2012 4:25:00 PM

GOLD PRICE DROPS AFTER FED MINUTES ARE RELEASED  

The Gold price has moved down strongly during afternoon trading, as the minutes released from the March Federal Reserve meeting indicated signs of stronger growth and a reduced likelihood of QE3 (quantitative easing). The Gold price is down nearly 6 percent since reaching the $1,790 mark at the end of February. “The Fed has distanced itself from QE3. It’s in line with what (Fed Chairman Ben) Bernanke said in February, but nonetheless it’s enough to reduce the near-term bullish momentum,” said James Steel at HSBC. “It’s fair to say the Fed remains conscious about the recovery, so perhaps this sell-off is overdone.”

The Federal Open Market Committee meeting brought about a continuance of previously held positions. However, the number of members who called for further easing actually dwindled from last month. Operation Twist is set to end in June, with an expected announcement, either about extending or ending the program, during the FOMC meeting April 24-25. Addressing the FOMC minutes, Sal Arnuk of Themis Trading said, “The minutes seem negative on the surface, (but) I’d be cautious into reading too much into these comments. … Then again, you don’t need too much to push the market around on a day like this. … We also seem to be consolidating from last quarter’s big move. … It’s tempting to say they may ease less and interest rates drift up, but we only need to smack ourselves in the face and see that this is an election year; we’re not expecting to see much that hits markets.”

The reduced likelihood of QE3 also put downward pressure on Brent and U.S. crude oil pricing. Adding to the potential pressure is news that Saudi Arabia will continue its increased output, even if many consumer countries tap their emergency stockpiles. A source familiar with the talks in Riyadh said, “Saudi production will unlikely change from the levels we see now, even if the stocks are released, because the stocks will not have an impact.”

At 4:15 p.m. (CDT), the APMEX precious metals spot prices were:

• Gold - $1,647.30 – Down $31.90.
• Silver - $32.70 – Down $0.45.
• Platinum - $1,644.00 – Down $9.90.
• Palladium - $654.10 – Down $5.70.

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