Gold Silver & Copper Have Little Reaction To Fed Statement

Bullion fell about 2 percent on Wednesday, its biggest one-day drop in three months, as the dollar rallied after the Federal Reserve dropped a set of guideposts it had been using to help the public anticipate when it would finally start bumping borrowing costs up from zero. Gold continued to decline this morning falling $8.60 to trade at 1332.70 as the Fed indicated that an interest rate increase may be in the cards sooner than later or that was the takeaway from Janet Yellen’s press conference yesterday. Gold prices are expected to move lower for the day as announcement of FOMC pushing the bond purchase down and decision over interest rates can reduce its inflation hedge appeal and safe haven appeal. Gold prices moved down further by more than 1% for the day as expectations started to build up before FOMC meet that Fed would announce its next round of tapering. Janet Yellen, the Fed chief said that the Fed could start to raise interest rates around six months after its current asset purchase program ends. FOMC further removed the threshold of 6.5% unemployment rate and 2.5% of Inflation for interest rate decision and could end the bond tapering by this fall. Silver took its cues from gold to trade at 20.653 down 173 points as platinum diverged gaining $2.70 to trade at 1449.90. Palladium eased by $1.10 to trade at 762.90.

Base metals on the LME traded on a positive note yesterday as a result of favorable employment data from UK increasing the expectations of demand from the country. However, mixed LME

inventories, strength in the DX along with weak market sentiments after QE tapering by the US Federal Reserve capped sharp gains in the prices. Copper eased giving back a bit of yesterday’s gains to trade at 2.963. LME Copper prices rose around 1.4 percent yesterday taking cues from decline in LME copper inventories by 0.7 percent to 269,725 tonnes. However, weak market sentiments due to another round of QE tapering by the US Federal Reserve along with strength in the DX failed to add downside pressure to the prices. The red metal touched an intra-day high of $6584.50/ton before closing at $6580.0/ton in yesterday’s trading session. London copper fell this morning but remained well above 3-1/2 year lows hit the in the previous session, after the US Federal Reserve chair signaled interest rates could rise next year, eroding support for liquidity dependent commodities. The Fed will probably end its massive bond-buying program this fall, and could start raising interest rates around six months later, Fed Chair Janet Yellen said on Wednesday, in a comment that sent stocks and bonds tumbling. By Thursday in Asia, markets had digested the Fed’s announcement, switching to a more upbeat view on U.S growth, curbing the selling of commodities, said analyst Sijin Cheng at Barclays in Singapore.

Traders can expect base metals prices to trade on a mixed note today as weak market sentiments due to another round of QE tapering by the US Federal Reserve coupled with strength in the DX will exert downside pressure in the prices. While on the other hand, expectations of favorable industrial orders data from UK will act as a positive factor. Further, forecast for upbeat industrial orders data from the UK along with estimates of rise in existing home sales and Philly fed manufacturing index from the US in the evening session will support an upside in the prices.