Prices rally sharply in the immediate aftermath of FOMC meet
Bullion metal prices ended higher on Wednesday, 18 September 2013 at Comex. Prices rallied sharply in the immediate aftermath of a surprising no-tapering announcement from the U.S. Federal Reserve's Open Market Committee Wednesday afternoon. The key outside markets also quickly moved into a bullish posture for the precious metals markets after the FOMC statementthe U.S. dollar index dropped sharply and crude oil prices moved sharply up on the day.
Gold for December delivery ended higher by $59.3 (4.5%) at $1,366.9 an ounce on the Comex division of the New York Mercantile Exchange on Wednesday.
December silver rose $1.41 or 7% to $23.1 an ounce on Comex on Wednesday.
In the currency market, the dollar index, which weighs the strength of the dollar against a basket of six other currencies, fell by 0.8%.
The Federal Open Market Committee failed to announce plans to reduce the pace of its asset purchases, as many had expected. Although the Federal Reserve did not make a tapering announcement, the policy statement did contain updated economic projections. Notably, the forecast for 2013 and 2014 GDP was lowered with the Committee expecting this year's growth between 2.0% and 2.3% (2.3%-2.6% June forecast) and 2014 growth ranging between 2.9% and 3.1% (3.0%-3.5% June projection).
During his press conference, Mr. Bernanke said economic data received since June has not been strong enough to justify scaling back asset purchases just yet. The Fed Chairman also said that recent tightening of financial conditions, as well as the ongoing fiscal uncertainty, played a part in the decision to maintain asset purchases at a pace of $85 billion per month ($40 billion in mortgage-backed securities, $45 billion in Treasuries).
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On the economic front at Wall Street today, the weekly MBA Mortgage Index jumped 11.2% to follow its recent string of declines including last week's 13.5% slide. Separately, housing starts increased 0.9% in August to a seasonally adjusted annual rate of 891,000. That was a bit below the consensus estimate of 910,000, yet that sting was mitigated by the understanding that single-family starts increased a solid 7.0% to 628,000. That was the highest level of single-family starts since February.
Building permits declined 3.8% from July to a seasonally adjusted annual rate of 918,000 (consensus 943,000). That disappointment notwithstanding, the housing starts report carried positive implications for Q3 GDP as the number of units under construction increased 2.2% to 654,000.
At the MCX, gold prices for October delivery closed higher by Rs 267 (0.9%) at Rs 29,990 per ten grams. Prices rose to a high of Rs 30,100 per 10 grams and fell to a low of Rs 29,277 per 10 grams during the day's trading.
At the MCX, silver prices for December delivery closed higher by Rs 176 (0.35%) at Rs 49,577/Kg. Prices opened at Rs 49,290/Kg and rose to a high of Rs 49,899/Kg during the day's trading.
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