For the second consecutive day, spot gold and silver are falling further in the wake of more profit-taking and chart consolidation after last week's rally. The fact that tensions in Ukraine are more or less at a standstill is working against precious metals entirely as the safe-haven demand we saw last week just isn't carrying over into this one.
The FOMC kicked off their monthly policy meeting today, though it will not wrap up until sometime tomorrow afternoon. With that being said, however, the outcome of this week's meeting seems to be written in stone by the marketplace already.
The FOMC Meeting Takes Center Stage
Today's FOMC meeting is taking over the spotlight from the crisis in Ukraine, and is in turn pushing the spot values of gold and silver downward. This is so because the market is anticipating the Fed will announce another $10 billion reduction to their monthly bond-buying initiative, also known as Quantitative Easing. Seeing that gold and silver are on the decline, it should come as no surprise that US equities have performed well thus far this week.
When the FOMC concludes their meeting sometime tomorrow afternoon, Janet Yellen is expected to deliver her first post-meeting press conference. This will be of particular interest to investors, though it is not expected that anything other than the expected reduction to Quantitative Easing will come as a result of the FOMC's policy meeting.
Also on the minds of investors this week will be the slate of housing data expected to be released on Wednesday and Thursday. Precious metals are expected to be delivered a further blow as a result of the expected decision to taper even more, but sub-par housing data very well may help stop the current fall of gold and silver.
Finally, we will continue to keep an eye on Ukraine over the next few days and weeks. Though the referendum in Ukraine went the way of Russia, no Western nations are willing to accept the vote as legitimate. The EU and the United States are planning further sanctions to be placed on Russia, individual Russians, and any other people connected with the secession of Crimea.
The new worry, albeit a small one, is that Russia may attempt to annex other regions of Ukraine, many of which have a strong population of ethnic-Russians. It is for this reason and many more that we will continue to keep a close eye on any and all happenings from Ukraine.