Closing Gold & Silver Market Report – 5/21/2014

Ted Prince

5/21/2014 4:02:00 PM

GOLD UNDER PRESSURE AS FED SHOWS NO FEAR OF INFLATION

The Gold price is down slightly to end the day following the release of the minutes from the Federal Reserve’s most recent summit.  The text indicated little concern on the part of the Fed for increased inflation stemming from the current pace of monetary stimulus.  With unemployment figures continuing to impress, it is likely that another monthly reduction in quantitative easing (QE) will be announced at the next monthly Fed policy meeting.  U.S. central bank debt buying and the later announcement of QE measures lifted Gold 70 percent from December 2008 through June 2011.  The initial monthly tapering of stimulus began in January 2014.  The original fear of this process along with perceived improvements in the domestic economy and a strong stock rally saw Gold drop over 20 percent last year.  Although the ongoing injections of “new money” are being reduced each month, Gold is still up over six percent year-to-date. 

U.S. stock markets rallied today following news that the Fed had no plans to raise interest rates anytime soon.  "The conversation is clearly shifting from this unprecedented accommodation to policy firming. For equity markets, this is a positive signal, because the economic momentum is more upbeat, but at the same time tightening is not imminent," Anastasia Amoroso, global market strategist at J.P. Morgan Funds, said.  With earnings season reaching its end, investors will continue to eye corporate earnings figures for signs of future gains among U.S. equities. 

At 5 p.m. (ET), the APMEX Precious Metals spot prices were:

• Gold, $1,294.00, Down $2.60.
• Silver, $19.45, Even.
• Platinum, $1,476.50, Up $7.60.
• Palladium, $830.50, Up $3.60.

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