Fed minutes early release knocks gold price down
The US Federal Reserve was ready to slow down its QE3 program of asset purchases in the summer or early fall, but weak payrolls data may already have changed its plans, reveals the minutes of its March meeting, released early on Wednesday.
This is the second time since the financial crisis hit, in 2008, that the US central bank signals its program of quantitative easing – to keep interest rates near zero and flood financial markets with cheap money – may end sooner rather than later.
Several Fed members prefer QE3, the latest round of asset purchases that amount to a staggering $85 billion a month, to stop “well before the end of 2013.”
That would mark the end of Fed actions – and similar programs in Europe and Japan – that have been a massive boon for gold.
Bullion prices dropped below $1,575 an ounce after the minutes’ release. And Goldman Sachs cut its 2013 gold price forecast for the second time in six weeks, to $1,545 an ounce from $1,610.
The minutes were released early because they were inadvertently sent a day in advance to Congress and some trade groups, the Fed said.
“The individuals on the distribution list—primarily congressional employees and employees of trade organizations—received the minutes shortly after 2 pm Tuesday.” They are normally released at 2 p.m., rather than 9 a.m., three weeks following Fed policy meetings.
At the March 19 and 20 meetings, the documents show, some felt the Fed would be able to begin narrowing the program down by midyear. Others saw the bank continuing through September before tapering down, and a few wanted to continue with the through 2013 and into next year at the current pace. Some also held out the possibility of growing the program if the economic outlook worsens.