Gold Price Falls $20 per Ounce on Stimulus Pullback Posted by Brian Ford on March 19, 2014
The Federal Open Market Committee (FOMC) decided to leave U.S. interest rates at 0.00%-0.25% for the time being but an additional $10 billion reduction in monthly stimulus measures was approved today. Policymakers would like to eliminate the originally-$85 billion per month Operation Twist as soon as possible but a stagnant U.S. economy and extreme volatility of U.S. markets has hampered their efforts. The measures taken today had an immediate effect on gold and silver spot values, with gold falling by as much as $23 to a monthly low of $1341.60 while silver fell by as much as $0.09 to $20.77 per ounce.
Operation Twist and its backers have taken a great deal of heat in recent months due to the fact that the monthly $85 billion expense has had little effect on our nation’s job creation or unemployment rates. The program, which is used to purchase Treasury bonds and mortgage-backed securities, has been scaled back slightly in each of the last few months. Each time the FOMC decides to cut $10 billion from the program stocks tend to spike while precious metals and other commodities experience a dive.
“Some investors see the moves as beneficial for the economy, because reducing stimulus efforts, in theory, means that the economy no longer requires assistance,” said Certified Gold Exchange analyst Ryan Black. “In the aftermath of the stimulus reductions, however, individuals who look at the facts can see that the factors that caused gold to rise and our economy to crumble in 2008 are still very much in play.”
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