Gold and silver prices spiked 1 percent on Wednesday after the Minutes of the Federal Open Market Committee for March 14-15, 2017, indicated the Fed is looking to start selling off some of its bond holdings this year.
According to the release, FOMC officials said unwinding of the Fed’s $4.5 trillion in bond holdings should be done at a steady pace, and in a manner that doesn’t cause disturbance to financial markets:
“Many participants emphasized that reducing the size of the balance sheet should be conducted in a passive and predictable manner.”Regarding interest rates, Fed officials stated that rates will climb along a “slightly steeper path” than previously thought, barring any unforeseen economic shocks. But FOMC officials also added that incoming economic data would still have the biggest influence the trajectory of the federal funds rate.
Following the Minutes of the FOMC release at 2:00 p.m. EST, the price of gold rose from $1244.24 to over 1258.00 by 7:30 p.m - a jump of more than 1 percent.
At press time, gold is only about $5 (0.4 percent) away from breaking out to a new high for 2017, and recovering more than 80 percent of the losses that were incurred from the U.S. election in November:
Silver fared a little bit better than gold, appreciating by 1.25 percent in the hours following the Fed’s statement.
While precious metals posted solid gains on Wednesday, the U.S. Dollar Index sold off 0.44 percent from its 20-day high of 100.85:
Gold photo by Bullion Vault