Gold remain stable After Fed Announces $10 Billion Tapering

San Francisco (Dec 15)   Gold prices were holding steady in the aftermath of the much-anticipated FOMC statement Wednesday afternoon that did serve up a $10 billion a month-bond buying reduction, beginning in January. However, trading was still choppy and on both sides of unchanged as of this writing. The gold market’s initial reaction to the FOMC statement is a classic case of a “sell-the-rumor, buy-the-fact” scenario—in which the gold market bears were able to beat down gold prices for months, mainly on “taper talk.” Then when the event actually occurred, the gold market bears were exhausted and had spent all their ammo. If gold prices can hold their modest gains and not lose ground the rest of this week, it would be a very good development for the gold market bulls. By 3:00 pm EST spot gold was up $1.00 at $1233, while  spot silver last traded up 10 cents to $20.01 an ounce.

The highly anticipated U.S. Federal Reserve Open Market Committee (FOMC) statement announced the very modest tapering, but also arguably tilted a bit more to the dovish side on U.S. interest rate policy. It could be that the raw commodity and precious metal market bulls also were boosted by the seemingly more dovish wording in this latest FOMC statement. Recent upbeat U.S. economic data and last week’s U.S. government budget deal did hint the FOMC would make a tapering move at Wednesday’s meeting. It could also be argued that outgoing Fed chairman Bernanke threw a bone to both the monetary policy hawks and doves as a final act in his term.