Gold and silver fell over 1.5 percent today on overall dollar strength and higher risk appetite after the Federal Reserve tapers an additional $10 billion, leaving only $65 billion in monthly bond purchases. Although some analysts were thinking the December’s mixed economic data would reduce the likelihood of a taper, “there is no surprise in the fact that tapering has continued,” said Jonathan Butler of Mitsubishi.
The SPDR gold trust (GLD) did see a capital inflow on Wednesday, but it still hovers near a five-year low. And analysts believe the physical demand from China will weaken going into the new year, even though psychical demand has not done much for spot prices. “The strong buying interest from China seen in the first weeks of January looks set to abate after the New Year festivities,” according to a an analyst note out of Commerzbank.
Silver has also been under pressure, nearing a two percent loss. The silver has tracked inversely with the US dollar, which has seen boost following yesterday’s FOMC minutes and Fed taper.
2014 has been shaky for equities, but recent declines are giving analysts reasons to re-enter the market, and safe-haven assets have been sold quickly.