Gold and Silver Edge Lower as ‘Taper’ Speculation Confuses Mr. Market

On Monday, gold (NYSEARCA:GLD) futures for August delivery, the most active contract, dipped $4.50 to close at $1,383.10 per ounce, while silver (NYSEARCA:SLV) futures for July decreased 20 cents to finish at $21.76.

Both precious metals experienced weakness, as investors received conflicting reports about the Federal Reserve’s next policy move. The central bank concludes its two-day meeting this Wednesday, which will be followed by a press conference by Chairman Ben Bernanke.

The Federal Reserve will also update its economic forecast. The outlook usually receives little attention from traders, but Jon Hilsenrath — considered to be a mouthpiece for the central bank — recently published an article for the WSJ saying any changes in the forecast will be a “critical issue.”

Hilsenrath explains: “But what they say about the economy will send important signals about what they expect to do in the future. If they maintain confidence in their economic forecasts, it could signal they think they’re on track to begin pulling back the program later this year.”

Although Hilsenrath wrote last week that the Federal Reserve was also likely to push back the “taper” talk at its policy meeting, an article from the Financial Times claims the central bank will signal a reduction in its bond-buying program.

Robin Harding explains, “Ben Bernanke is likely to signal that the US Federal Reserve is close to tapering down its $85bn-a-month in asset purchases when he holds a press conference on Wednesday, but balance that by saying subsequent moves depend on what happens to the economy.”

By the end of the trading day, the SPDR Gold Trust (NYSEARCA:GLD) closed 0.50 percent lower, while the iShares Silver Trust (NYSEARCA:SLV) declined 1.10 percent. However, gold miners (NYSEARCA:GDX) such as Newmont Mining (NYSE:NEM) and Yamana Gold (NYSE:AUY) gained 0.75 percent and 0.40 percent, respectively. Shares of Silver Wheaton (NYSE:SLW) jumped 1.0 percent.

Don’t Miss: Does the Bond Market Resemble a Ponzi Scheme?

If you would like to receive professional analysis on miners and other precious metal investments, we invite you to try our premium service free for 14 days.

Disclosure: Long EXK, AG, HL, PHYS

Follow Eric on Twitter (@Mr_Eric_WSCS)

original article