Gold futures fell on Tuesday and hit their lowest level in nearly a month as traders pondered whether the Federal Reserve will signal a taper in today’s announcement, which is set for 2pm EST. Gold closed on Tuesday at $1,366.90 an ounce and the metal fell as low as $1,360.20 during Tuesday’s New York trading session. Gold prices have prices have been buoyed by the agency’s aggressive stimulus policies in recent years, and fears of the cessation of such policies could have further dramatic impact on gold prices.
The Future of US Bond Purchases
Analysts believe that Fed Chairman Bernanke is set to cut the central bank’s bond purchases which have held at $85 billion monthly in an effort to fuel economic growth. Most analysts don’t believe, however, that the Fed will consider tapering asset purchases. Nevertheless, the expectation of an announcement of tapering has been shaking the markets and causing increased volatility, including a two-day rally of stock prices. Should the Fed institute a tapering policy, it could potentially thwart inflation.
Finally, the market may begin to rumble following President Obama’s announcement that Chairman Bernanke will be leaving his post at the end of the term in January. Fed Vice Chair Janet Yellen is a front runner to replace Bernanke, but there are several other candidates, including Treasury Secretary Larry Summers who have yet to be disqualified, and therefore, analysts are anxious and eager to see who will be shaping the Fed’s policies moving forward.