Precious Metals Tumble, Fed Minutes Mull QE4 Longevity

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Gold and silver futures remained firmly in negative territory Thursday after the latest Federal Reserve minutes revealed that several of its members would like the central bank to halt its fourth round of quantitative easing (QE4) sometime in the next year.

COMEX gold futures settled down by $14.20, or 0.8%, at $1,674.60 per ounce but subsequently fell to $1,665.00 in electronic trading.  Silver futures closed at the COMEX with a loss of $0.29, or 0.9%, at $30.72 per ounce but later dropped to $30.10 per ounce.

Gold and silver stocks extended their sell-off as well, with the Philadelphia Gold & Silver Index retreating 3.8% to 162.16.  Notable decliners included IAMGOLD (IAG) and Kinross Gold (KGC) – which tumbled by 5.4% to $11.14 per share and by 4.5% to $9.42 per share, respectively.

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As for the Fed minutes – a recap of the most recent Federal Open Market Committee (FOMC) meeting – revealed the following about the central bank’s monetary policy:

“In considering the outlook for the labor market and the broader economy, a few members expressed the view that ongoing asset purchases would likely be warranted until about the end of 2013, while a few others emphasized the need for considerable policy accommodation but did not state a specific time frame or total for purchases. Several others thought that it would probably be appropriate to slow or to stop purchases well before the end of 2013, citing concerns about financial stability or the size of the balance sheet. One member viewed any additional purchases as unwarranted.”

The potential for the Fed’s money printing program to end later this year prompted traders to sell precious metals, and helped the U.S. dollar rally by 0.7% against a basket of foreign currencies.

The Fed minutes can be viewed in their entirety at: http://www.federalreserve.gov/monetarypolicy/fomcminutes20121212.htm

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