Gold Hits Multi-Month Low After Federal Reserve Talks Taper

Gold Silver

On Wednesday, gold (NYSEARCA:GLD) futures for December — the most active contract — fell $15.50 to close at $1,258 per ounce, while silver (NYSEARCA:SLV) futures declined 27 cents to finish at $20.10.

Gold and silver both witnessed heavy selling pressure and made new intra-day lows as the Federal Reserve released its minutes of the policy meeting held in late October. The central bank maintained the stance that they might reduce monthly bond purchases “in coming months” if economic data supports the move.

“Although the incoming data suggested that growth in the second half of 2013 might prove somewhat weaker than many of them had previously anticipated, participants broadly continued to project the pace of economic activity to pick up,” the minutes stated. “The acceleration over the medium term was expected to be bolstered by the gradual abatement of headwinds that have been slowing the pace of economic recovery — such as household-sector deleveraging, tight credit conditions for some households and businesses, and fiscal restraint — as well as improved prospects for global growth.”

After the Fed minutes, the U.S. Dollar Index, which compares the greenback in a basket against six other flat currencies, reached as high as 81.13. The Dow Jones Industrial Average dropped about 100 points and ultimately settled the day in negative territory. Meanwhile, the price of gold fell to its lowest level in four months.

By the end of the trading day, shares of the SPDR Gold Trust (NYSEARCA:GLD) declined 2.3 percent, while the iShares Silver Trust (NYSEARCA:SLV) dropped 2.4 percent. Gold miners (NYSEARCA:GDX) Barrick Gold (NYSE:ABX) and Newmont Mining (NYSE:NEM) both fell more than 3 percent. Shares of First Majestic Silver (NYSE:AG) plunged 3.7 percent.

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Disclosure: Long EXK, AG, HL, PHYS