Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gold slipped $4.50 to close just under $1,225 and then dropped another $8 in electronic trade after the Fed sounded upbeat on the economy at the conclusion of its October meeting.

As expected, the FOMC's post-meeting policy statement announced the end of quantitative easing, which had been winding down by $10 billion per month for half-a-year. Tantamount to printing money, QE has swelled the Fed's balance sheet to around $4.5 trillion since 2008, devaluing the dollar and supporting higher prices for commodities denominated in it for international trade.

The Fed was more optimistic about the economy than in the past, saying underutilization in the labor markets is "gradually diminishing" and global economic weakness is unlikely to damage the U.S. recovery. While the policy statement maintained the long-held position that interest rates will remain near zero for a "considerable time," it added the caveat that rates could rise sooner if data warrant. The dollar surged against most major rivals after the Fed statement, further pressuring gold.

Russia added more than 37 tons of gold to its reserves in September, according to the IMF, giving it nearly 1,150 tons, the fifth most in the world. Valued at $1.5 billion, the increase was the biggest since the nation's financial crisis in 1998. Russia's official gold reserves have nearly tripled since 2005 and now exceed those of Switzerland and China.

At the Comex close: December gold slipped $4.50 to $1,224.90; December silver lost 4 cents to $17.26, and then another four cents after hours; January platinum gained $2.90 to $1,269.20 before falling back $2 after hours; and December palladium rose $7.35 to $800.70 an ounce, and then surrendered $4 after the FOMC statement.