An individual, affiliated with the financial industry in any aspect, have treated the FOMC statement like the latest release of a new sci-fi movie-highly anticipated and in the spotlight. This leaves no room for surprises since there’s been a ton of speculation as to whether the Fed will actually start withdrawing the stimulus measures.  Hence, on that fateful (or fortunate day depending on the prevailing positions you were holding) of 19^th June 2013, when the markets took a southern course, the magnitude of the importance of the statement went into another level altogether.

The FOMC statement, in brief, said the US monetary policy will not see an imminent change even though the economy is expanding at a moderate pace. There was no inclusion regarding the tapering of the Fed’s monthly bond-buying program in the statement. The FOMC also decided to keep the rates unchanged at 0-0.25% as long as the unemployment rate remains above 6.5% and 1-2 year projected inflation remains below 2.5%.   However, Ben Bernanke, the supremo of the Federal Reserve, at his press conference did hint that the Fed in the coming months will back off the accelerator on its monthly bond buying. The Fed statement came in more hawkish than previously anticipated with policymakers seeing "diminished" downside risks to the economic outlook. Policymakers noted that "the Committee sees the downside risks to the outlook for the economy and the labor market as having diminished since the fall". Policymakers acknowledged that over the intermeeting period, "economic growth will proceed at a moderate pace and the unemployment rate will gradually decline toward levels the Committee judges consistent with its dual mandate". While admitting that inflation has remained below the Fed's longer-run objective, it was believed to have partly reflected "transitory influences".

Financial markets slumped as investors remained concerned about Fed’s tapering of QE measures. Wall Street was under pressure as US economic data beat expectation, paving the way for the Fed to reduce stimulus. Fed’s indications of less downside risks in the economic environment and completion of QE tapering by mid 2014 have lifted the greenback. Meanwhile, benign inflation has reduced the appetite for gold purchases to hedge against inflation. Besides the Fed, a return of risk appetite, ETF outflow and lack of physical demand are the key factors pressuring the yellow metal.

It’s time for the predictions to be laid on the table for future references and in no uncertain terms, mine has reached a hammering of sorts. So in a certain way, I will ask my ardent readers to please infer your predictions keeping the changing times in mind!